There are fun T-Bars and then there’s SMSF Transfer Balance Account Reporting
You may need to lodge quarterly TBAR reports with the ATO from 1 July 2018
You may have heard of new superannuation rules, introduced on 1 July 2017, imposing a $1.6 million cap (the “transfer balance cap”) on the value of pension accounts that could be held from that date without tax penalty.
In summary, from 1 July 2018, the ATO requires superannuation funds to report certain events to them using a “transfer balance account report” (TBAR). This report is lodged to enable the ATO to record and track an individual’s balance for both their transfer balance cap and total superannuation balance.
The trustees of all qualifying Self-Managed Superannuation Funds (SMSFs) need to be aware of these ongoing reporting requirements!
What you need to report
A SMSF must report events that affect a member’s transfer balance, including:
- Retirement income streams (account-based pensions but not transition to retirement pensions) that a member was receiving on 30 June 2017 that continued to be paid to them on/after 1 July 2017
- New account-based pensions (but not transition to retirement pensions)
- Some limited recourse borrowing arrangement payments
- Compliance with a commutation authority issued by the Commissioner
- Personal injury (structured settlement) contributions
- Commutations of pensions
Note that pension payments, investment earnings and certain other transactions (e.g. family law payment splits) are not required to be reported on the TBAR.
When you need to report
If a pension was in place at 30 June 2017 it must be reported to the ATO on the TBAR by 1 July 2018.
From 1 July 2018, the timing of TBAR reporting depends on the “total superannuation balances” of the members of the super fund. The total superannuation balance of each member includes the balance of their accumulation accounts and pension accounts held across all superannuation funds they are a member of at 30 June of the previous year. This includes member balances, not just in SMSFs, but also in any industry or retail superannuation funds of which they are a member.
- Annual reporting is required where all members of the SMSF have a total superannuation balance of less than $1 million. In this situation, the SMSF can report this information at the same time as when its annual return is due.
- Quarterly reporting is required where a SMSF has any member with a total superannuation balance of $1 million or more (whether or not that member is receiving a pension). In this case, the TBAR must be lodged within 28 days after the end of the quarter in which occurs the event that affects a member’s transfer balance.
If a member exceeds their $1.6 million transfer balance cap, the SMSF will be required to report earlier than the dates shown above.
The TBAR may be lodged on paper, electronically via ATO online services, or through the Tax Agent Portal. We note that penalties may be applied for late lodgement of the TBAR.
What you need to do
We encourage all SMSF trustees to review and understand the requirements for TBAR reporting from 1 July 2018, especially because penalties may apply for late lodgement. Allworths plans to assist all our affected SMSF clients with their TBAR reporting.
Please remember to get in touch with us as soon as possible if you are (or think you might be) in a situation where a TBAR may need to be lodged, for example, the commencement or commutation of a pension.
Important notice
The advice in this post is intended to be general in nature and does not take into account your personal circumstances. Before implementing any of the strategies discussed, we recommend you speak to your licenced financial advisor or solicitor.
Allworths Wealth Management Pty Limited (AFSL 457155) is the Wealth Management arm of Allworths Chartered Accountants. For further information please contact us on (02) 9264 6733 or email growth@allworths.com.au.
