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Pensions reporting | no time to rest on your laurels

The ATO has recently come out with the reporting requirements for the transfer balance cap for funds paying ‘retirement pensions’. There is no doubt that we need to change the way we engage with our pension clients and change our advice and reporting processes.


This is driven by the introduction of the new $1.6 million transfer balance cap which limits the amount of assets you can use to pay pensions from super with.

Prior to 1 July 2017, pensions only need to be reported once a year through the annual SMSF income tax return to the ATO.

Under the new reporting requirements:

If you have clients in receipt of ‘retirement income streams’ (not preserved transition to retirement income streams), from 1 July 2018 they will be required to report to the ATO the credits and debits that count towards the pension transfer balance cap if a member has $1M or more total superannuation balance and is receiving a pension from superannuation assets

Credits are the commencement value of new retirement pensions and debits are generally ceasing a pension either by partial or full commutation. It is important to note that standard pension withdrawals are not counted as debits against the pension transfer balance cap.

This is welcome news, as initially the reporting requirements applied to all members in receipt of retirement pensions regardless of total super balance, but what this does mean is that you will need to ensure you have a clear picture of your clients’ total super balances so you know when the reporting requirements start.

How are SMSFs impacted?

From 1 July 2018, the transfer balance cap credits and debits must be reported within 28 days after the end of the quarter that they occur in. For instance, if you start a new pension on 1 July 2018, then this credit will need to be reported by 28 October 2018.

What do my clients need to know?

Clients who are impacted need to report their credits and debits for the period from 1 July 2017 to 30 June 2018 to the ATO by 28 October 2018.

Now is not the time to rest on your laurels. Start compiling your list of clients now and commence reporting as soon as possible. There is a paper-based form available now, but we hope to see digital reporting become available to clients and tax agents from 1 January 2018.

If this article has raised any questions, please contact John Lethbridge, SMSF Specialist Advisor on 1800 333 143.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

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