What you need to know for SMSFs’ new reporting obligations

Self-managed super funds (SMSFs) have new reporting obligations. Commencing from 1 July 2018, SMSFs will be required to report events to the ATO which will have an impact on an individual’s transfer balance account (TBA). A transfer balance account report (TBAR) has been developed by the ATO to capture the new information super providers need to provide.

SMSFs will generally not need to start event-based reporting for the transfer balance cap using the TBAR until 1 July 2018. However, an SMSF needs to ensure that it has appropriately documented all income stream valuations and decisions for the 2017–18 year.

What events need to be reported?

An SMSF must report events that affect a member’s transfer balance, including:

• income streams a member was receiving on 30 June 2017 that
o continued to be paid to them on or after 1 July 2017, and
o are in retirement phase.
• new retirement phase income streams
• some limited recourse borrowing arrangement payments
• compliance with a commutation authority issued by the Commissioner
• personal injury (structured settlement) contributions
• commutations of retirement phase income streams.

Some exclusion from reporting

Events that do not need to be reported include:
• pension payments
• investment earnings and losses
• when an income stream ceases because the interest has been exhausted
• the death of a member

SMSFs with members who only have an accumulation interest in the fund will not be required to report transfer balance events, other than structured settlement contributions, until a superannuation income stream is commenced, which in some cases may be a number of years away.

When do these events need to be reported?

It depends on whether the SMSF had one or members in the fund at 30 June 2017. Having a total superannuation balance equal to or greater than $1 million.

If an SMSF member has a pre-existing income stream, it must be reported to the ATO on or before 1 July 2018. Then from 1 July 2018, all SMSFs must report events that affect their members’ transfer balances.

An SMSF is required to report earlier if a member has exceeded their transfer balance cap.

Any SMSF can choose to report events as they occur. And in some instances, are encouraged to do so to avoid incorrect excess transfer balance determinations issuing.

Once your reporting has commenced, lodge the TBAR with the ATO as soon as practicable after the event has occurred. To ensure your member’s transfer balance account is updated. If not lodge by the required date, the transfer balance account will be adversely affected and the member/s may be penalised. You may also be subject to compliance action and penalties. Generally, for SMSFs, this penalty is calculated at the rate of one penalty unit for each period of 28 days (or part thereof) that the event remains unreported, up to a maximum of 5 penalty units (one penalty unit is currently equal to $210).

SMSF trustees and advisers need to ensure they comply with the TBAR regime. To avoid penalties and manage each member’s transfer balance cap correctly.

You may contact us on 02 4732 3844 or visit www.judgeaccountants.com.au so we keep you up to date and provide guidance on this new rule from the ATO.