Any pre-existing retirement income streams that members were receiving on 30 June 2017, that continued to be paid to them on or after 1 July 2017, were required to be reported to the ATO by 1 July 2018.
From 1 July 2018, all SMSFs must report events that affect their members' transfer balance cap either annually or quarterly.
To work out if the quarterly or annual arrangements apply, an SMSF will need to understand the total superannuation balance of all of its members 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.
Once you determine when the first Transfer Balance Cap Reporting (TBAR) event occurs and the relevant valuation date, you need to assess the total super balance for all of the SMSF members. 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.
Please note that a members total superannuation balance refers to all superannuation accounts that the member holds. Therefore, it is possible to have an SMSF with member balances under $1M that is required to reporting quarterly. This could occur when one or more members have super account balances outside of the SMSF that push them over the $1M threshold.
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 between 1 July 2017 and 30 September 2018. Could be high net wealth clients engaging in commutation strategies to preserve income allocated to pension
- Any other relevant transfer balance cap event
We highly recommend getting in touch with these clients, to discuss whether reporting is required by 28 October 2018 and discuss reporting for the remainder of the 2018/19 financial year.
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.