Transfer Balance Account Reporting (TBAR)

Overview of event-based reporting for Self-Managed Superannuation Funds

As you may be aware, there is now a $1.6 million limit per member on the amount that can be transferred into a super retirement pension. This is known as the Transfer Balance Cap (TBC) and it applies to all superannuation pensions that a member may have across all their superannuation funds.

What might be a little less known is that from 1 July 2017, all super funds including Self-Managed Superannuation Funds (SMSFs) have new reporting obligations imposed by the Australian Tax Office (ATO) in order to ensure the $1.6 million limit is measured/adhered to by members.

What events need to be reported to ATO?

A SMSF must report events that affect a member’s transfer balance. Some main events are:

  • All new retirement pensions commenced after 1 July 2017 – this event is a credit or increase to the account.
  • Commutation (stopping) of a pension (either partially or fully). This event is a debit or decrease to the account.
  • Commutation (stopping) of a pension (either partially or fully) so that the member can roll their funds into another superannuation fund.
  • Compliance with a commutation authority issued by the ATO.
  • A death of a member where the remaining spouse converts their current pensions into accumulation and starts a new death benefit/reversionary pension.

Please note that all existing pensions at 30 June 2017 that continued to be paid on or after 1 July 2017 were reported to the ATO as a one off exercise at that time. It was the value at 1 July 2017 that was reported.

What does not need to be reported?

There is no need to lodge an event for a member for the following:

  • Where the member has not started a retirement pension – please note that a transition to retirement pension commencement is not a reportable event.
  • Ordinary pension payments made by the member – this has no effect on this cap.
  • Allocation of earnings to the pension account (both positive and negative).

Reporting Timelines

An SMSF should report events that arise on or after 1 July 2017, either on an annual or quarterly basis. The reporting frequency for SMSF’s depends on the total superannuation balance (TSB) of the members of a particular fund.

This is determined as followed:

Annual Basis

If all members of the SMSF have a Total Super Balance less than $1 million on 30 June the year before the first member starts their first retirement pension:

Due date:

  • Is the due date of the SMSF annual return.

Example:

  • J Super Fund is a SMSF with one member, being John, who has a balance of $800,000 at 30 June 2018.
  • John is 65 years old and commences a retirement pension for $800,000 on 1 July 2018. As no member has a balance above $1 million and this event is during the 30 June 2019 year – the event reporting due date to the ATO is 15 May 2020 (when the return is due).
  • In the above, John has $800,000 remaining of his $1.6m cap in future to start new retirement pensions.

Quarterly Basis

If any member of the SMSF had a Total Super Balance of $1 million or more on 30 June the year before the first member starts their first retirement pension:

Due date:

  • You need to report the event by the 28th day after the end of relevant quarter.

Example:

  • M & J Super Fund is a SMSF with two members, both in accumulation, being Mary who has balance of $1.2 Million at 30 June 2018 and Jo who has a balance of $400,000.
  • Mary is 66 years old and commences a retirement pension for $1,200,000 on 1 July 2018. This event occurred in the July to September 2018 quarter therefore it is required to be reported to the ATO by 28 October 2018.
  • In the above, Mary has $400,000 remaining of her $1.6m cap in future to start new retirement pensions.

If your superannuation pension is in a large industry, retail or public offer APRA-regulated superannuation fund – the reporting cycle is different to a SMSF (generally on a monthly basis). It will be the responsibility of the large industry fund administrators to report to the ATO.

Please note that we take care of this reporting for all of our clients with a Self-Managed Super Fund. We complete many funds on a live/daily basis and have the systems in place to be able to deal with these reporting requirements.
The transfer balance account and related rules may not be as straight forward as they seem. SMSF trustees should consult with a trusted expert if they have any questions in relation to this topic or other superannuation matters.
About the Author
Nick Petaroudas
Nick joined Accru Melbourne in 2011 and has over 15 years’ experience working in the public practice servicing clients in business services. He is our Superannuation Specialist and prides himself on being a Technical Superannuation Expert.
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