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Little known fact about TBAR reporting | Accurium

SMSF professionals having now completed the first transfer balance account reporting (TBAR) with clients at 1 July 2018 will have heard that SMSFs will face a total super balance test to determine their reporting framework obligations for future TBAR events.

What many may not be aware of is that the test for how frequent an SMSF must report TBAR events is completed only once and then set for that SMSF. The Fund must comply with the determined frequency of reporting even if member balances change over time.

On their webpage ‘New reporting obligations for SMSFs’ the ATO state that

“Once the reporting framework is set, SMSF trustees will not be expected to move between annual and quarterly reporting due dates, regardless of fluctuations in any of its members' balances.”
 
The reporting framework obligation for an SMSF is either annual or quarterly and is based on the total super balance of fund members at the later of:

  • 30 June 2017 if a member had a pre-existing income stream or where the first member started their first retirement phase income stream during the 2017–18 year, or
  • 30 June the year before the first member starts their first retirement phase income stream.

Where at the applicable 30 June at least one member had a total superannuation balance of $1 million or more then the SMSF must report all required events for all members within 28 days after the end of the relevant quarter. For events in 2017-18 this will be 28 October 2018.

However, if no member had a total superannuation balance of $1 million or more then the fund must report events no later than the due date for lodging the annual return for the income year in which an event occurs.

Example

The ReportOften SMSF at 1 July 2017 had two members. Janet had $560,000 in accumulation, and Richard had $1,200,000 in an account based pension. In 2017-18 Janet commenced pension with her entire balance of $570,000 on 1 October 2017, and later in June took a pension payment of $17,000. Richard also took his minimum pension payment of $60,000 and an additional lump sum of $150,000.

The fund has members in retirement phase in 2017-18 and so needs to look at the 30 June 2017 member balances to determine how frequent they must report under the TBAR framework.  As Richard has a total superannuation balance of $1 million or more the fund will have quarterly reporting requirements. The fund will have reported Richard’s pension balance at 1 July 2018 and must report Janet’s pension commencement and Richard’s lump sum withdrawal by 28 October 2018.

At 30 June 2018 Janet’s balance was $545,000 and Richard’s balance was $995,000. Even though Richard’s balance has now dropped below $1 million and so no member has a balance of $1 million or more the fund must still report any TBAR events in 2018-19 and future income years quarterly, because that was the reporting framework locked in upon the initial assessment for this fund at 30 June 2017.

The information in this document is provided by Accurium Pty Limited ABN 13 009 492 219 (Accurium). It is factual information only and is not intended to be financial product advice, tax advice or legal advice and should not be relied upon as such. The information is general in nature and may omit detail that could be significant to your particular circumstances.  While all care has been taken to ensure the information is correct at the time of publishing, superannuation and tax legislation can change from time to time and Accurium is not liable for any loss arising from reliance on this information, including reliance on information that is no longer current. Tax is only one consideration when making a financial decision. We recommend that you seek appropriate professional advice before making any financial decisions.