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  • Event-based reporting for SMSFs

    Self-managed super funds (SMSFs) have new reporting obligations. This is due to the new transfer balance cap measure and event-based reporting framework.

    The transfer balance account report (TBAR) that is used to report is a separate form from the SMSF annual return (SAR). The TBAR enables us to record and track an individual's balance for both their transfer balance cap and total superannuation balance.

    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.

    There is no 'special circumstances' discretion for contraventions of the transfer balance cap and it will be particularly important for all SMSF trustees and members to self-monitor.

    On this page:

    What you need to report

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

    • income streams a member was receiving on 30 June 2017 that
      • continued to be paid to them on or after 1 July 2017, and
      • 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 exclusions 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
    • information that individuals report to us directly using a Transfer balance event notification form (NAT 74919). Typically, this is when the following events occur
      • family law payment split
      • debit event from fraud, dishonesty, or bankruptcy
      • structured settlement contributions made before 1 July 2007.
       

    See also:

    How often and when you need to report

    If an SMSF member has a pre-existing income stream, it must be reported to us on the TBAR on or before 1 July 2018. A pre-existing income stream is an income stream the member was receiving on 30 June 2017 that:

    • continued to be paid to them on or after 1 July 2017, and
    • is in retirement phase.

    From 1 July 2018, all SMSFs must report events that affect their members' transfer balances. Timeframes for reporting are determined by the total superannuation balances of the SMSF's members:

    • where all members of the SMSF have a total superannuation balance of less than $1 million, the SMSF can report this information at the same time as when its annual return is due, or
    • SMSFs that have any members with a total superannuation balance of $1 million or more must report events affecting members’ transfer balances within 28 days after the end of the quarter in which the event occurs.

    Transfer balance account events that occur during 2017–18 should be reported at the same time as the SMSF's first TBAR is due:

    • If the SMSF is reporting annually, this will be the same time as the trustee is due to lodge the 2017–18 SMSF annual return.
    • If the SMSF is reporting quarterly, this will be 28 October 2018.

    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

    See also:

    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.

    Where an SMSF has only one member with an individual total superannuation balance of $1 million or more, it must report all events for all members within 28 days after the end of the relevant quarter, even if the balance of the first member to start a retirement phase income stream is below $1 million.

    See also:

    Once the reporting framework is set, SMSF trustees will not be expected to move between annual and quarterly reporting due dates, regardless of fluctuations to any of its members' balances.

    We will continue to evaluate the benefits and risks arising from this reporting framework. For example, the $1 million threshold may be re-evaluated in the future, given that the $1.6 million transfer balance cap is indexed.

    See also:

    How to view your total superannuation balance

    A member's total superannuation balance is essentially the sum of all their accumulation and retirement phase superannuation interests across all their accounts and funds.

    In recognition that a member's total superannuation balance could be spread across multiple superannuation providers, SMSF trustees will need to self-assess their members' total super balances when determining if the annual or quarterly reporting framework applies as there may be outstanding information yet to be reported to us.

    Trustees are expected to demonstrate that they have taken a fair and reasonable approach to assess their members' total super balances when determining if the annual or quarterly reporting framework applies.

    See also:

    When you need to report sooner

    If a member exceeds their transfer balance cap, you must report the following events sooner:

    • a voluntary member commutation of an income steam in response to an excess transfer balance (ETB) determination must be reported within 10 business days after the end of the month in which the commutation occurs
    • responses to commutation authorities must be reported within 60 days of the date the commutation authority was issued.

    Earlier reporting is encouraged in some situations

    We strongly encourage you to report earlier in some situations.

    For example, if an SMSF member rolls their super benefit into an APRA-regulated fund and starts an income stream there – and it is not reported to us by the SMSF at the time it happens – a double-counting of the member’s income streams will occur. This is because there will be a mismatch in timing of the reporting done by the APRA-regulated fund and the SMSF. In this instance, an SMSF is encouraged to report the commutation as it occurs or no later than at the time of the rollover.

    Likewise, if the transitional rules apply and an SMSF member was in excess at 1 July 2017 and rectifies it by 31 December 2017 but does not report the rectification to us when the pre-existing income stream is reported, we will not know the member has rectified the excess. In this instance, an SMSF is encouraged to report the commutation that rectifies the small excess under the transitional rules at the time the pre-existing income stream is reported.

    In these situations, there is risk we will incorrectly issue an ETB determination and a commutation authority. This could lead to increased administrative costs for the SMSF.

    See also:

    Working out your reporting due date

    The following examples will help you work out your reporting due date for the 2017–2018 financial year:

    • Where at least one member of the fund has an income stream just before 1 July 2017 and all members of the SMSF have a total super balance of less than $1 million as at 30 June 2017 – go to Table 1.
    • Where at least one member of the fund has an income stream just before 1 July 2017 and at least one member of the SMSF has a total super balance of $1 million or more as at 30 June 2017 – go to Table 2.
    • Where a member of the SMSF starts an income stream on or after 1 July 2017 and as at 30 June in the income year immediately prior to the member starting the income stream all members of the SMSF have a total super balance of less than $1 million – go to Table 3.
    • Where a member of the SMSF starts an income stream on or after 1 July 2017 and as at 30 June in the income year immediately prior to the member starting the income stream at least one member of the SMSF has a total super balance of $1 million or more – go to Table 4.
    Table 1

    Event type

    Due date

    An income stream payable to a member just before 1 July 2017 that continues to be paid to the member on or after 1 July 2017

    On or before 1 July 2018

    Any other event that is not a:

    • a commutation of an income stream in response to an ETB Determination issued to an SMSF member
    • response to a commutation authority
     

    No later than the due date for lodging the SMSF's annual return for the financial year in which the event occurs

    A commutation of an income stream in response to an ETB determination issued to an SMSF member

    Within 10 business days after the end of the month in which the commutation occurs

    Responses to commutation authorities

    Within 60 days of the date the commutation authority was issued

    Table 2

    Event type

    Due date

    An income stream payable to an SMSF member just before 1 July 2017 that continues to be paid to the member on or after 1 July 2017

    On or before 1 July 2018

    Any other event that is not a:

    • commutation of an income stream in response to an ETB determination issued to an SMSF member
    • response to a commutation authority
     

    The latter of:

    • 28 October 2018
    • 28 days after the end of the quarter in which the event occurred
     

    A commutation of an income stream in response to an ETB determination issued to an SMSF member

    Within 10 business days after the end of the month in which the commutation occurs

    Responses to commutation authorities

    Within 60 days of the date the commutation authority was issued

    Table 3

    Event type

    Due date

    Any other event that is not a:

    • commutation of an income stream in response to an ETB determination issued to an SMSF member
    • response to a commutation authority
     

    No later than the due date for lodging the SMSF's annual return for the financial year in which the event occurs.

    A commutation of an income stream in response to an ETB Determination issued to an SMSF member

    Within 10 business days after the end of the month in which the commutation occurs

    Responses to commutation authorities

    Within 60 days of the date the commutation authority was issued

    Table 4

    Event type

    Due date

    Any other event that is not a:

    • commutation of an income stream in response to an ETB determination issued to an SMSF member
    • response to a commutation authority
     

    The latter of:

    • 28 October 2018
    • 28 days after the end of the quarter in which the event occurred
     

    A commutation of an income stream in response to an ETB determination issued to an SMSF member

    Within 10 business days after the end of the month in which the commutation occurs

    Responses to commutation authorities

    Within 60 days of the date the commutation authority was issued

    Consequences of late reporting

    If an SMSF does not lodge a TBAR by the required date, the member’s transfer balance account will be adversely affected and the member may be penalised.

    Our focus leading up to and after 1 July 2018 is to support SMSFs and their advisers to prepare for reporting on the transfer balance cap, and help them understand how to report these events.

    We will work with SMSF professionals to help them transition, rather than focusing on compliance measures.

    In the future, an SMSF may be subject to compliance action and penalties, although we don't intend to deny ECPI claims if an SMSF doesn’t report their transfer balance cap on time.

    Reporting methods and lodgment

    You can report information to us by:

    1. mailing a paper report. Go to this page to download and print the TBAR form. Lodge by sending your completed paper report to the address provided on the form
    2. lodging electronically through ATO online services
    3. submitting a data file through the Business Portal or Tax Agent Portal. This is known as bulk data exchange. If you're planning to use this method, refer to the electronic reporting specificationsExternal Link. Further assistance is available from the Digital Partnership OfficeExternal Link.

    You can report multiple events per member in a TBAR when lodging a paper form or via ATO online services.

    If you are lodging a data file using the Business Portal or Tax Agent Portal, multiple member data records can be lodged in each file (data set).

    A super provider must have a current ABN to use an electronic reporting channel. Our electronic reporting channels are the most efficient method of TBAR lodgment, and they will automatically route reports to the correct processing area.

    Correcting a report

    If you need to correct information you have reported to us in your TBAR, you must cancel the original report and then lodge a separate report with the correct information.

    The instructions specific to the lodgment method used contain further information on how to amend an incorrect report.

    Commutation authorities

    We may issue a commutation authority to super providers where a member has exceeded their transfer balance cap. A commutation authority will detail the amount that must be commuted from a specified income stream for that member. Providers must action the commutation authority and report to us using the TBAR within 60 days. The TBAR must report that they have:

    • complied with the commutation authority by commuting the full amount stated in the notice, or
    • complied with the commutation authority by commuting the income stream as much as possible – even if this is less that the amount in the commutation authority, or
    • not complied with the commutation authority because
      • the maximum release amount is nil, or
      • the member is deceased, or
      • we issued the commutation authority in relation to a non-commutable capped defined benefit income stream.
       

    If you do not commute the required amount by the due date or tell us why you have not done so (using a TBAR), the income stream will stop being in the retirement phase and this will affect entitlement to exempt current pension income. You may also be liable for penalties or subject to compliance action.

    There is also an administrative penalty if you do not notify your member of your response to the commutation authority within 60 days of the issue of the commutation authority.

    Commuting the amount

    Where you can commute the amount, you should make reasonable efforts to contact the member and discuss their options. For example, whether to retain the commuted amount in an accumulation account or take it as a lump sum. If you cannot contact the member, you should commute the amount in a way that you judge to be in the member's best interests.

    By the due date stated in the commutation authority, you should commute the lesser of:

    • the amount to commute identified in the commutation authority
    • the maximum available release amount.

    You should also send us a transfer balance account report with the commutation's details by the due date.

    You must also notify your member that there is no standard tax form for providing the required information. You can use your own business processes to comply and you will meet the approved form requirements, so long as you include the following details in the correspondence you send to your member:

    • the member's details
      • name
      • date of birth
       
    • details from the commutation authority
      • issue date
      • due date
      • income stream account number
      • unique superannuation identifier (if applicable)
      • member client identifier (if applicable)
      • the amount to commute.
       
    • details of the lump sum commuted (where a lump sum was paid in accordance with a commutation authority)
      • the amount
      • the date it was paid.
       

    You must also declare on the correspondence that the information it contains is 'true and correct', and sign it.

    Not commuting the amount

    Where you do not commute the amount, you should send us a TBAR by the due date, indicating one of the following reasons:

    • the income stream is a capped defined benefit income stream
    • the member is deceased
    • the maximum available release amount is nil.

    Where you did not comply because the income stream is a capped defined benefit income stream, you must notify your member of your choice not to commute the amount. Although it is not legally required, it may be good practice to also advise your member of the reason you were unable to comply.

    Where you did not comply with the commutation authority because the maximum available release amount is nil or the member is deceased, you are not required to notify the member (or their estate) of this. However, it may be good practice to advise this outcome to your member.

    Case studies

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

    Table 5: 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 needs to report the pre-existing income stream to us on or before 1 July 2018.

    As Bill had a total superannuation balance of less than $1 million on 30 June 2017, the SMSF will report events that occur on an annual basis.

    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 commenced an income stream), the SMSF has an annual reporting obligation.

    The commencement 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 commencement 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 needs to report the pre-existing income stream to us on or before 1 July 2018.

    As Gary has a total superannuation balance of less than $1 million as at 30 June 2017, the SMSF will report events that occur on an annual basis.

    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 commenced 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 commencement 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.

    Unless the trustee of Snowflake SMSF reports the value of the commutation that occurred prior to Jeff rolling over his interest to the APRA fund, the trustee of the APRA fund will report the credit arising from the new income stream before Snowflake SMSF is required to lodge the TBAR to advise us of the debit.

    We will consider that Jeff has exceeded his transfer balance cap by $100,000 and issue him with an ETB determination.

    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 just before 1 July 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 $400,000 on 30 October 2017 to avoid having to remove the excess capital, plus notional earnings and pay excess transfer balance tax.

    Alex’s fund will need to report 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 is required to report events 28 days after the end of the quarter in which the event occurs. The SMSF does not need to report the commutation until 28 January 2018.

    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.

    See also:

    Last modified: 23 Feb 2018QC 54088