From 1 July 2018, all SMSFs must report events that affect their members' transfer balance cap either annually or quarterly. There has been some confusion around whether a SMSF has quarterly or annual Transfer Account Balance Reporting (TBAR) requirements.
To work out if the quarterly or annual arrangements apply, an SMSF will need to understand the total superannuation balance (TSB) of each member at the later of:
- 30 June 2017 if a member had a pre-existing income stream or where the first member starts their first retirement phase income stream during the 2017–18 year
- 30 June the year before the first member starts their first retirement phase income stream.
This does mean, you will need to check with your clients, what other superannuation policies that they hold, in order to determine the TSB for each member. Note, complying pensions have different calculations to determine TSB.
Once you determine when the first TBAR event occurs and the relevant valuation date, you need to assess the total super balance for each member at the start of that relevant year. If any SMSF members total superannuation have $1M or more, the fund must report within 28 days after the end of the quarter in which the event occurs. Alternatively, if all members have under $1M total superannuation balance, annual reporting is set.
It is important to note that once the reporting timeframe is set, this will not change for the SMSF, regardless of movements of total superannuation balances for members above or below $1M.
If you have any clients that have quarterly TBAR requirements, you will need to check whether any reporting is required for:
- Income streams that commence at 1 July 2018. Most likely will have to provide an estimated figure
- Commutations or partial commutations of pension
- Any other relevant transfer balance cap event
SMSFs who fell under quarterly TBAR were required to report any TBAR events for the September 2018 quarter by the 28th of October 2018. You should ensure that your clients know what a TBAR event is and when they should notify you.
Please note that if your client has exceeded their transfer balance cap, this should be reported as soon as possible.
There will be late lodgement penalties for failing to comply within the new TBAR guidelines based on penalty units. Even though the ATO has made comment that they will be lenient on TBAR reporting requirements for the 2018/19 financial year, we recommend that you get your reporting process in order now and don’t risk late lodgement penalties.