Heffron | Transfer Balance Account Reporting – Final Position

Transfer Balance Account Reporting – Final Position

Following on from Meg’s blog article earlier this month, the ATO has now responded to calls from the SMSF industry to simplify reporting and reduce unnecessary work when it comes to TBARs and whether or not accumulation balances also need to be reported.

In this article, Lyn clarifies the new ATO position.

Thankfully common-sense has prevailed and 30 June 2017 accumulation balances only need to be reported in a TBAR in limited situations. 

A copy of the ATO’s new instructions for completing TBARs can be found here https://www.ato.gov.au/Forms/Super-Transfer-Balance-Account-Report-Instructions/.  Some of the relevant information in relation to reporting accumulation values is not very user-friendly so we’ve taken the opportunity to clarify the rules below.

 

Scenario 1 - Member has only accumulation/TRIS balances in the SMSF at 30 June 2017

Generally speaking, a TBAR is not required at all for members who have accumulation/TRIS balances only.  However, trustees may choose to use the TBAR to report an accumulation/TRIS value in limited situations where not doing so might disadvantage the member.

Where a member has an accumulation account/TRIS, the amount to be included in the member’s Total Superannuation Balance is the “total amount of superannuation which would become payable if the individual voluntarily closed their account on that day”.  In theory this figure should take into account the costs to dispose of fund assets, tax on disposal, administration/wind up costs etc.

However, these costs are rarely included in either the fund’s financial statements or the figure reported as the member’s “closing account balance” on the 2017 SMSF Annual Return.  This may mean that the value reported on the Annual Return over-states the member’s Total Superannuation Balance.  Where this over-statement would materially impact the member (eg they would otherwise be over $1.6m and therefore have a non-concessional contributions cap of $nil AND are wanting to make non-concessional contributions in the 2017/18 financial year), a revised value should be reported via the TBAR.

We should note that the TBAR instructions do not specifically mention that the same rules apply for a TRIS but since they are treated in the same way for TBAR purposes (ie neither are retirement phase pensions), it would be reasonable assume that the same concepts would apply for these income streams.

 

Scenario 2 - Member has only retirement phase pension interests in the SMSF at 30 June 2017 and all of these pensions are account based pensions

in this situation, there is no accumulation balance to report on the TBAR and a $nil accumulation value is not required.

The TBAR will simply report the 30 June 2017 value of the pensions.

Since no accumulation value has been reported on the TBAR, the ATO will calculate the accumulation value for Total Superannuation Balance purposes as:

  • the member’s Closing Account Balance (shown in Section F on the 2017 SMSF Annual Return) less
  • the value of the retirement phase pensions reported via the TBAR.

In this case $nil.

 

Scenario 3 - Member has only retirement phase pension interests in the SMSF at 30 June 2017 but at least one of these pensions is a market linked, lifetime, life expectancy or flexi pension

In this situation, a $nil accumulation value needs to be reported on the TBAR in addition to the usual pension values.

 

Scenario 4 – Member has both accumulation/TRIS and retirement phase pension interests in the SMSF at 30 June 2017 and all of these retirement phase pensions are account based pensions

As per scenario 1 above, the accumulation/TRIS value only needs to be reported in the TBAR if the trustee is wanting to report a value lower than the value shown in the Annual Return.

The 30 June 2017 value of the pensions will need to be reported in a TBAR as usual.

Because no accumulation value has been reported on the TBAR, the ATO will calculate the member’s accumulation value for Total Superannuation Balance purposes using the same method as above (ie the difference between their Closing Account Balance from the 2017 SMSF Annual Return and the value of the retirement phase pensions reported via the TBAR).

 

Scenario 5 - Member has both accumulation and retirement phase pension interests in the SMSF at 30 June 2017 and at least one of these retirement phase pensions is a market linked, lifetime, life expectancy or flexi pension

In this situation, the member’s 30 June 2017 accumulation value must be reported in a TBAR in addition to the usual pension values.

If you need to report an accumulation/TRIS value, you do so by:

  • completing sections A to D as usual
  • at question 11, selecting “Total super balance”
  • at question 15, selecting “Accumulation phase value”
  • at question 17, effective date = 30 June 2017
  • at question 18, the accumulation/TRIS value (if needing to report $nil, enter “0.00”)
  • leave question 20 blank
  • complete the remainder of the form as usual

The reporting of 30 June 2017 accumulation/TRIS values (if required) is due by 8 September 2018.  The date for reporting 30 June 2017 pension values remains 2 July 2018.

If you have already lodged a TBAR reporting pension values but not accumulation/TRIS values and now need to report an accumulation/TRIS value, you do not need to cancel the original report and lodge a new one.  Simply complete a new TBAR reporting the accumulation/TRIS value.

For further explanation of the new TBAR requirements in respect of accumulation values, register for our webinar on 24 May 2018.

Click here for further information on our webinars.