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  • Event-based reporting case studies

    In the case studies below, the pre-existing income streams or income streams that start are in retirement phase.

    Table 4: Reporting requirement under different scenarios

    Main points

    Scenario

    Reporting requirement

    Pre-existing income stream exists

    Total superannuation balance for all members is below $1 million

    Bill has a total superannuation balance of $900,000 as at 30 June 2017, a pre-existing income stream valued at $900,000 and no other super interests.

    Over time, the value of the income stream increases to $1 million and Bill commutes $100,000 from the income stream on 1 July 2019.

    Bill's SMSF reported the pre-existing income stream to us before 1 July 2018.

    As Bill had a total superannuation balance of less than $1 million on 30 June 2017, the SMSF is required to report any events that occur annually in line with their SAR for that year.

    The SMSF would be required to report on the TBAR the commutation that occurred on 1 July 2019 no later than the due date of the fund's SMSF annual return for 2019–20, generally 15 May 2021.

    SMSF first starts to pay a member an income stream after 1 July 2017

    Total superannuation balance of all members is below $1 million

    Tam and Cho are the only two members of their SMSF. They have no other super interests.

    On 30 June 2017, Tam's total superannuation balance is $800,000 and Cho's is $550,000.

    On 4 February 2018, Tam starts an income stream valued at $700,000.

    As no member of the fund had a total superannuation balance of $1 million or more as at 30 June 2017 (the year before the first fund member started an income stream), the SMSF is required to report any events that occur annually in line with their SAR for that year.

    The start of Tam’s income stream would need to be reported to us at the same time the SMSF annual return for 2017–18 is due, generally 15 May 2019.

    SMSF first starts to pay a member an income stream after 1 July 2018

    Total superannuation balance of a member is above $1 million

    On 30 June 2018, Mary has a total superannuation balance of $1.2 million.

    On 20 September 2018, Mary starts an income stream valued at $1.2 million and has no other super interests. Over time the value of the income stream decreases to $800,000.

    On 3 March 2019, Mary commutes $100,000 from the income stream.

    As Mary had a total superannuation balance of $1 million or more as at 30 June 2018, the SMSF is required to report any events 28 days after the end of the quarter in which the event occurs.

    The start of the income stream would need to be reported to us no later than 28 October 2018.

    The commutation would need to be reported no later than 28 April 2019.

    Pre-existing pension exists and SMSF has annual reporting obligation

    Assets supporting pension grows to exceed $1 million

    Gary has a total superannuation balance of $900,000 as at 30 June 2017.

    He has two pre-existing income streams valued at $500,000 and $400,000 respectively and no other super interests.

    Gary continues to make contributions and, as at 30 June 2018, his total superannuation balance is $1.1 million. On 1 July 2018, he commutes the two income streams and starts a new income stream valued at $1.1 million.

    The trustee reported the pre-existing income stream to us before 1 July 2018.

    As Gary has a total superannuation balance of less than $1 million as at 30 June 2017, the SMSF is required to report any events that occur annually in line with their SAR for that year.

    This will not change even though his total superannuation balance increases over time.

    The following reportable events would need to be individually reported to us no later than the due date of the fund's SMSF annual return for 2018–19, generally 15 May 2020:

    • each debit resulting from the commutation of the two pre-existing income streams
    • the new income stream.

     

    First income stream starts on or after 1 July 2018

    SMSF must calculate all total superannuation balances to determine reporting obligation

    Fiona, of Seagull SMSF, has a total superannuation balance at 30 June 2018 of $500,000 and starts an income stream valued at $500,000 on 1 July 2018.

    Jimmy has a total superannuation balance at 30 June 2018 of $2 million, made up of $500,000 in Seagull SMSF and $1.5 million in an APRA super fund. All of Jimmy’s interests are in accumulation phase.

    Jimmy is a member of Seagull SMSF and has a total superannuation balance of $1 million or more as at 30 June 2018. The SMSF is required to report any events 28 days after the end of the quarter in which the event occurs.

    Seagull SMSF must report the starts of Fiona’s income stream to us no later than 28 October 2018.

    Rollover from SMSF to APRA fund inadvertently causes excess transfer balance

    On 30 June 2017 Jeff, a member of Snowflake SMSF, has a pre-existing income stream valued at $900,000, which his SMSF reported to us on 30 June 2018.

    On 7 August 2018, Jeff rolls over his interest, now valued at $800,000 to an APRA fund to start a new income stream on the same day.

    As Jeff had a total superannuation balance of less than $1 million as at 30 June 2017, the SMSF has until the due date for lodging its SAR for the 2018–19 year to report the commutation to us. However, this means the APRA fund will report the credit arising from Jeff’s new income stream before the SMSF advises us of the debit.

    Unless the SMSF reports the commutation at the time of the rollover to APRA, we will consider that Jeff will exceed his transfer balance cap by $100,000 and we will issue an ETB determination.

    SMSF starts part-way through a year

    Robyn and Chris both held their superannuation in APRA funds.

    On 30 June 2018 Robyn had a total superannuation balance of $925,000 and Chris had a total superannuation balance of $788,000.

    In September 2018 Robyn and Chris started an SMSF and in October 2018 Robyn started a pension. At the time Robyn started their pension, the pension was valued at $1,110,000.

    As no member of the fund had a total superannuation balance of $1 million or more as at 30 June 2018 (the year before the first fund member started an income stream), the SMSF is required to report any events that occur annually in line with their SAR for that year.

    SMSF change in membership

    Abbey and Adam were the two members of their SMSF.

    As at 30 June 2018 Abbey had a total superannuation balance of $750,000 and Adam had a total superannuation balance of $850,000.

    In October 2018 Adam started a pension valued at $800,000.

    In November 2018 Abbey left the fund, rolling over her interest to a new SMSF.

    In January 2019 Noel joined the SMSF, rolling in assets of $1.2 million. On 1 June 2019 Noel started a pension valued at $1.3 million.



    As no member of the fund had a total superannuation balance of $1 million or more as at 30 June 2018 (the year before the first fund member started an income stream), the SMSF is required to report any events that occur annually in line with their SAR for that year. However they can choose to report earlier.

    This won't change even though the fund membership changes.

    As Abbey hadn't started an income stream at the time she rolled her interest over to a new fund, there's no event in her transfer balance account to report.

    The following reportable events would need to be individually reported to us no later than the due date of the fund's SMSF annual return for 2018–19, generally 15 May 2020:

    • the start of Adam's pension in October 2018
    • the start of Noel's pension in June 2019.



    Noel will need to take particular care to monitor his transfer balance account and ensure he doesn't exceed his transfer balance cap.

    Reporting a reversionary death benefit income stream

    Robyn and Daryl are the two members of their SMSF.

    Robyn and Daryl each had a pre-existing income stream valued at $1.2 million.

    On 12 January 2019 Robyn passes away and their death benefit income stream is a reversionary income stream, with Daryl being the reversionary beneficiary. The value of the reversionary income stream on 12 January is $900,000.

    As both members of the SMSF had a total superannuation balance of $1 million or more as at 30 June 2017, the SMSF is required to report any events 28 days after the end of the quarter in which the event occurs.

    The start of the reversionary income stream in Daryl's hands needs to be reported to us no later than 28 March 2019.

    The trustee reports the event to us, clearly identifying that the income stream is a reversionary income stream and the effective date is the date of death of the member.

    We will show the pending credit in Daryl's transfer balance account information on line, along with the date the credit will arise in Daryl's transfer balance account, 12 January 2019.

    Darryl has until 12 January 2019 to decide whether to commute their own life interest pension or the death benefit income stream in order to avoid exceeding their transfer balance cap.

    Transitional rules apply and member commutes excess

    Member may receive a determination if commutation is not reported

    Alex had a pre-existing income stream valued at $1.64 million at 30 June 2017. As he exceeded the transfer balance cap by $100,000 or less on 1 July 2017 due to a pre-existing income stream, the transitional rules apply. Alex commuted $40,000 on 30 October 2017 to avoid having to remove the excess capital, plus notional earnings and pay excess transfer balance tax.

    Alex’s fund reported the pre-existing income stream to us by 1 July 2018.

    As Alex had a total superannuation balance of $1 million or more as at 30 June 2017, the SMSF does not need to report the commutation until 28 October 2018.

    However, if Alex’s fund does not report the commutation that was made under the transitional rules at the same time as the pre-existing income stream, we will consider that he has exceeded the transfer balance cap and issue a determination.

    Pre-existing pension exists and SMSF has annual reporting obligation.

    SMSF starts to pay a member a death benefit income stream on 15 January 2018.

    On 30 June 2017 Kate, a member of Alignment SMSF, has a pre-existing income stream valued at $900,000.

    On 15 January 2018, Kate starts receiving a death benefit income stream valued at $800,000.

    Alignment SMSF has annual reporting obligations and chooses to report the death benefit income stream to us at the time the 2017–18 SMSF annual return was due (that is 15 May 2019).

    The trustee of Alignment SMSF will need to report the pre-existing income stream to us by 1 July 2018.

    As Alignment SMSF did not report the death income stream until 15 May 2019, Kate has been in excess for 16 months.

    Kate must remove the excess capital of $100,000 plus the notional earnings that accrued from the day she exceeded her cap to the date of the ETB determination.

    Kate will pay excess transfer balance tax on the notional earnings that accrued from the day she exceeded her cap to the day she is no longer in excess.

    If Alignment SMSF had reported the death income stream earlier, while Kate would still have been in excess, the amount of notional earnings and excess transfer balance tax would not have been as high, as the excess would have been removed earlier.

    See also:

    Last modified: 07 Nov 2018QC 57304