If you or a member in your SMSF has a balance over $1m and are currently receiving an income stream you will be required to report events to the ATO that impact your transfer balance account quarterly from 1 July 2018. This is called transfer balance account reporting (TBAR). In addition to this if you commenced a pension prior to 1 July 2017 you will need to submit a report to the ATO before 1 July 2018. But don’t worry, we are here to help. Let’s start by learning a bit about what it involves.
What is my transfer balance account?
The transfer balance account is a method of tracking transactions and amounts in retirement phase. The balance of your transfer balance account determines whether you have exceeded your transfer balance cap at the end of any given day. The transfer balance cap is a limit on the amount you can hold in retirement phase ($1.6 million in 2017–18). Click here for more information from the ATO.
What events impact my transfer balance account and need to be reported?
Any transaction that changes the balance of your transfer balance account must be reported. These include the following:
- Lump sum payments and other pension commutations
- Pension commencements
- Ceasing a pension
- Commence receiving a reversionary pension from a deceased spouse
When do I need to report these events?
If you or a member of your fund has a total superannuation balance over $1m and are receiving an income stream, the event must be reported 28 days after the end of the quarter in which the transaction occurred. If your balance is under $1m you can report the events when you lodge your tax return for the financial year.
Ben is 61 and has a total superannuation balance of $1,150,000 at the start of the financial year which is entirely in retirement phase. He is aware he will need to report events to the ATO that impact his transfer balance account.
On the 1st of January 2019 Ben makes a non-concessional contribution of $300,000 using the bring forward rule. He decides he would like to convert this contribution to retirement phase on the same day so he can receive an income stream from that balance. Before the 28th April 2019 Ben must report this pension commencement to the ATO.
How can we assist to report these events?
Regular communication with your advisor or accountant is vital with TBAR. Notifying us of the events that you believe may impact your transfer balance account will allow us to prepare and lodge the online or paper form before the deadline.
So get in touch with us here if one of these events occurs, so you can stay on top of these new reporting requirements.
This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.