The ATO has indicated certain scenarios affecting an SMSF member’s transfer balance cap should be reported under the transfer balance account report (TBAR) sooner rather than later to avoid double counting of income streams.
“There are some cases where it will be in the best interest of members to report certain events closer to the time they occur, regardless of whether you’re reporting quarterly or annually,” ATO SMSF segment director Maria Iacopino told an SMSF webinar held by the regulator yesterday.
“Some situations you should be aware of are when a member rolls over their interest to an APRA (Australian Prudential Regulation Authority) fund and starts an income stream there, if you do not report this to us at the time of the rollover, the mismatch in timing of TBAR reporting by APRA funds and the SMSF will lead to double counting of their income streams.
“If a member was in excess at 1 July 2017 and rectifies this by 31 December 2017 under the transition rules, if you do not report the rectification to us when you report the 30 June 2017 pension balances, we will not know the member has rectified the excess.”
Iacopino warned that under these instances, there was a real and likely risk that not reporting certain events earlier will result in the ATO incorrectly issuing an excess transfer balance determination.
“And this, in turn, could lead to additional workflows and administrative costs for the SMSF,” she said.
On 9 November, the ATO announced that SMSFs will need to report any events that impact on members’ transfer balances within 28 days after the end of the quarter in which the event occurs, however, events-based reporting would only apply to members with total super account balances of $1 million or more.
The TBAR regime requires events-based reporting by SMSFs from 1 July 2018, but SMSFs are now able to commence reporting to the ATO.