Tracey Scotchbrook, SMSF Specialist Advisor and Director of Superology, discusses the challenges with and deadlines for the Transfer Balance Account Report (TBAR) regime.
Before anyone pulls out the red pen I know that TBAR is technically an acronym and not a word! It is, however, a term that is now firmly entrenched in the superannuation vernacular. For many accountants TBAR certainly represents a four letter word! Speaking to practitioners, confusion still seems to surround the transfer balance account reporting obligations that now apply.
The first two TBAR lodgement deadlines have now passed.
- Transitional phase: Initial reporting of existing and continuing retirement pension balances present as at 30 June 2017. Reportable on or before 1 July 2018 (effectively 2 July 2018 as the due date fell on a Sunday); and
- The first reporting cycle: SMSFs reporting quarterly were required to lodge their first quarterly TBAR by 28th October 2018. This first quarter required the reporting of any reportable events occurring in the September 2018 quarter AND the 2018 financial year.
I have spoken with several accountants who (incorrectly) did not think that the TBAR applied to their clients as their total superannuation balances were below $1.6m and the restructuring of retirement phase pensions for transfer balance cap purposes was not required prior to 1 July 2017.
What needs to be reported?
The initial reporting period was to facilitate the transition of all existing retirement phase pensions into the new world of the transfer balance cap. This required the reporting of the value of ALL retirement pensions in place as at 30 June 2017 that continued beyond that date, regardless of their value.
TBAR is an events based or a positive reporting system. That means that a report is only required to be lodged where a reportable event occurs in the relevant period.
Reportable events include:
- The value of new retirement phase pensions commenced from 1 July 2017
- Certain limited recourse borrowing arrangement repayments (specific arrangements only)
- Voluntary commutations of retirement phase pensions (e.g. amounts rolled back into accumulation)
- Compliance with excess transfer balance determination
- Compliance with a commutation authority issued by the Commissioner
- Contributions made under the personal injury contributions concessions
Lodgement Due Dates
The regular reporting cycle for TBAR is determined by examining the total superannuation balances of all members of the SMSF (not just the pension member). That test is applied once at the time the first member commences a retirement phase income stream in the Fund. Once determined that reporting cycle is fixed for the life of the Fund. It won’t change even where another member commences a pension down the track or where there is a substantial increase or decrease in the member account balances.
It is important to note that regardless of the SMSFs assessed reporting cycle, compulsory early reporting applies to all SMSFs for the reporting of commutations resulting from excess transfer balance determinations or Commissioner commutation authorities.
The table below summarises the TBAR reporting cycles and due dates.
|Determined reporting period using members TSB at:
‒ 30 June 2017 for existing pensions
‒ 30 June of the year prior to commencement of a retirement phase income stream
|All members of the SMSF have a total superannuation balance of less than $1 million||Any member of the SMSF has a total superannuation balance of $1 million or more
Even where the retirement phase income stream is below $1 million
|Reporting Due Dates||Annual return due date for the financial year in which the event occurs||Within 28 days after the end of the quarter in which the event occurs|
|First Due Date||Due date for lodgement of the 2017/18 annual return||28th October 2018|
|Commutation due to Excess Transfer Balance Determination||Within 10 business days after the end of the month in which the commutation occurs||Within 10 business days after the end of the month in which the commutation occurs|
|Commutation authority issued by the ATO||Within 60 days of the date the commutation authority was issued||Within 60 days of the date the commutation authority was issued|
*Does not change if member balance falls below $1m.
You can voluntarily report earlier than the prescribed reporting dates. This will not prejudice the SMSFs assessed lodgement cycle. There may in fact be times where earlier reporting may be important. One example is where a pension is commuted and rolled over to another superannuation fund. APRA funds are required to report monthly and would be required to report the commencement of a new pension. An excess determination may be triggered where the corresponding commutation has not yet been reported by the SMSF. Whilst this can be rectified it is much simpler to report the pension commutation straight away.
You’ve mucked it up?….. Don’t Panic!
If you have missed reporting for any of your clients for any reason or think you may have made a mistake – don’t panic!
In this honeymoon phase the ATO is working with industry as all parties come to terms with the new reporting requirements. Whilst late lodgement penalties can apply, the ATO has previously stated that they “will work with SMSF professionals to help them transition, rather than focusing on compliance measures.”
If you have missed lodging TBAR for a client or clients, the most important thing to do is to get it done. Take the opportunity to get everything up to date now.
If you have identified a reporting error you do have the ability to rectify it. When correcting an error or a duplication you need to lodge a TBAR to cancel that particular event. Ensure that the transaction details match exactly to that originally lodged. If corrected details need to be reported, separately report the new details in full for that transaction.
It is important that you only transact on the specific item that requires correction. Take care not to include other transactions (even if initially reported at the same time) otherwise you may end up with duplications or the cancellation of other, correct transactions.
Tracey Scotchbrook is a SMSF Specialist Advisor and Director of Superology Pty Ltd with 15 years’ experience. Early in her accounting career Tracey had the opportunity to work with self-managed superannuation funds, setting her on the pathway to specialisation. She is actively involved in the SMSF Association (“SMSFA”) and is the former WA Chapter Chair and National Membership Committee Member. Her accreditations include: SMSF Specialist Advisor (SSA) with the SMSF Association, CA and CPA SMSF Specialist, and Charted Tax Advisor with the Tax Institute. Tracey is a regular presenter to industry professionals and trustees, commentator, educator, and writer. In 2009 Tracey was awarded the Praemium Scholarship by the SMSFA. Contact Tracey at [email protected]