The ATO has released further guidance on when self managed superannuation funds (SMSFs) need to report events affecting their members' transfer balance accounts (by making a transfer balance account report, or TBAR) for the purposes of the $1.6 million pension cap.
From 1 July 2018, SMSFs that have any members with a total superannuation balance (TSB) of $1 million or more must report events impacting that member's transfer balance account (TBA) within 28 days after the end of the quarter in which the event occurs.
SMSFs in which all the members have TSBs less than $1 million can choose to report events which impact their members' transfer balances at the same time that the fund lodges its annual return.
If an SMSF member was receiving a pre-existing income stream on 30 June 2017 (and it has continued in retirement phase on or after 1 July 2017), a TBAR must be lodged with the ATO by 1 July 2018. TBAR events that that occur during 2017–2018 should be reported at the same time the first TBAR form is due. That is, by:
- 28 October 2018 (for those reporting quarterly); or
- at the time the SMSF annual return is lodged (for those reporting annually where all of the SMSF members have total super balances less than $1 million).
The $1 million total threshold will be tested as at 30 June in the financial year before a fund's first TBAR becomes due. If an SMSF member was receiving a retirement phase superannuation income stream from the fund just before 1 July 2017, the members' TSB is measured at 30 June 2017.
If an SMSF member enters retirement phase for the first time after 1 July 2018, the ATO says that the SMSF will need to assess its position, in relation to the $1 million threshold, on 30 June immediately before the start of the relevant income stream. If the $1 million threshold is triggered at the first time an SMSF member starts an income stream, the SMSF will be locked into the quarterly TBAR reporting regime. A fund will not move between annual and quarterly TBAR reporting due to subsequent fluctuations to any of its members' balances.
It would appear that if one member of an SMSF has TSBs of $1 million or more across all their funds (not just the SMSF), all of the other SMSF members will be dragged into the into the quarterly TBAR reporting net.
Superannuation funds are required to report events for retirement phase income streams that result in a credit or debit in an individual's TBA. Common reportable events include:
- income streams that a member was receiving just before 1 July 2017 (and that continued to be paid on or after 1 July 2017 in the retirement phase);
- new retirement phase income streams (including death benefit income streams);
- commutations of retirement phase income streams (partially or fully); and
- converting a transition to retirement pension into a retirement phase superannuation income stream.
If a member exceeds their transfer balance cap of $1.6 million, they must report the following events sooner:
- commutations (in response to an excess transfer balance determination issued by the ATO to an SMSF member) must be reported 10 business days after the end of the month in which the commutation occurs; and
- commutation authorities – the response must be reported within 60 days of the date the commutation authority was issued.