Under these new reporting obligations SMSFs are required to report to the Australian Taxation Office (ATO) specific events that impact a member’s TBA. These events are reported to the ATO using the Transfer Balance Account Report (TBAR) form.
Below we go into more detail about some of the common types of events that are required to be reported as well as the required timeframe.
Common reporting events
Common events that may impact a member’s TBA, which requires an SMSF to report to the ATO include:
- Superannuation income streams in existence just before 1 July 2017 that are continued to be paid on or after 1 July 2017
- The commencement of a new superannuation income stream, where the member is in retirement phase
- The commutation (roll-back) of a superannuation income stream
- The cessation of a superannuation income stream
- ATO issued commutation authority notices
- Limited recourse borrowing arrangement payments that affect the value of an interest supporting a superannuation income stream
- Structured settlement contributions received on or after 1 July 2017 (e.g. contributing the proceeds of certain insurance payouts)
SMSF members, who had a superannuation income stream (pension) in existence just before 1 July 2017 which continued to be paid on or after 1 July 2017, were required to report the balance of the pension by 1 July 2018.
All events occurring on or after 1 July 2017 are required to be reported either quarterly or annually, depending on the SMSF member’s total superannuation balance.
If a SMSF had at least one member with a total superannuation balance in excess of $1 million as at 30 June 2017, the SMSF is required to report any events 28 days after the end of the quarter. The first quarterly due date for TBARs is 28 October 2018.
For SMSFs that had no members with a total superannuation balance in excess of $1 million as at 30 June 2017, the SMSF is required to report any events by the due date of the SMSFs return.
What does this practically mean?
SMSFs will need to work closely with their business advisers to ensure that all relevant events are reported to the ATO in a timely manner. Planning will become more important so that income streams can be commenced and reported in the appropriate quarter to maximise the tax savings that come with commencing a pension.
If you are drawing a pension from your superfund and wish to draw more than the minimum pension amounts required by law, it may be beneficial to commute an amount from your pension account and withdraw from your accumulation account instead. There may be adverse tax implications if you simply increase your pension payments. This should be discussed with your business adviser before any lump sums are withdrawn from your superfund.
Get in touch with our team at BLG Business Advisers to discuss your requirements either online or by calling (02) 4229 2211.