Heffron | Quarterly TBAR reporting – does every fund need to lodge?  What if I can’t lodge on time?

Quarterly TBAR reporting – does every fund need to lodge?  What if I can’t lodge on time?

With the 1 July 2017 introduction of the $1.6m Transfer Balance Cap came a new obligation on superannuation fund trustees to report certain member “events” to the ATO. These events are reported using a “Transfer Balance Account Report” or TBAR.  For TBAR purposes, SMSFs are either annual or quarterly reporters with the first TBARs under the quarterly system due on 28 October 2018.

Does this mean every SMSF who is a quarterly reporter needs to lodge a TBAR before 28 October 2018?

Put simply, no.

TBAR reporting is an events based system.  A TBAR only needs to be lodged where an “event” has taken place.  In addition to reporting the 30 June 2017 value of retirement phase pensions in place just before 1 July 2017, reportable events include:

  • the commencement of a retirement phase pension on/after 1 July 2017,
  • the reclassification of a transition to retirement income stream (TRIS) as a retirement phase TRIS on/after 1 July 2017,
  • a lump sum commutation (full or partial) from a retirement phase pension on/after 1 July 2017, and
  • the reversion of a retirement phase pension on/after 1 July 2017.

There is no need to lodge a TBAR to report pension payments, lump sums from accumulation accounts, etc.  In addition, there is no need to lodge a “nil” TBAR for funds which have not had any reportable events in the relevant period.

For many funds, it is quite possible that post 1 July 2017 no further TBARs will need to be lodged until say:

  • a member dies and his or her pension is transferred to the surviving spouse, or
  • the trustee decides to wind up the fund and transfer the remaining member balances to a public fund.

Of course, those quarterly reporters who have had a reportable event in the relevant period need to take appropriate action to identify these events, collect the necessary information and lodge a TBAR for the affected members.  This can be a time consuming process for those accountants not processing their funds’ transactions regularly, but it won’t be an issue for every SMSF.

What if you won’t be able to meet the 28 October 2018 due date?

A TBAR is an approved form and trustees can be penalised $210 for each period of 28 days that the form is late up to a maximum of $1,050.  However the ATO have indicated that they are currently taking an “educative and supportive approach” where TBARs are lodged late.  Specifically they have stated “Where agents will not meet the 28 October deadline, but are working towards lodging a TBAR due on 28 October 2018 as soon as possible, there is no need to contact us to seek a formal extension of time.  Whether or not an extension of time is granted, any late lodgement of a TBAR may result in the member’s transfer balance account being adversely affected, the member being adversely affected and possible reverse workflow for the trustee. We therefore strongly recommend agents discuss with members potential consequences of late lodgement.”