ATO flags common errors with TBAR cancellations

ATO assistant commissioner Tara McLachlan said the ATO has started to see a few common issues arise with TBARs for SMSFs, including the reporting of commutations that occurred on or before 30 June 2017 when only events from that date needed to be reported.

TBARs containing incorrect ABNs or TFNs for the fund or member have also caused issues along with incorrect values, Ms McLachlan said.

X

Continue to Website

Missing information, particularly a member’s date of birth, has also been a problem.

There have also been issues where the SMSF has reported pensions that are not paid by the SMSF.

“For example, a lifetime pension a member received from a defined benefit fund. [In these situations,] the SMSF only needs to report the pensions it pays; otherwise, there will be duplication,” the assistant commissioner explained.

Where SMSFs report a cancellation, Ms McLachlan said it’s critical that trustees make it clear they are cancelling information that was previously provided. It is also important that the information provided in the cancellation form matches the information that was originally provided in the TBAR.

“This allows us to match the previous information with what you want cancelled,” Ms McLachlan said.

“For paper forms, you need to indicate the TBAR is a cancellation by marking ‘yes’ at section B. If you then need to report correct information, you need to lodge another paper TBAR for with the correct event and correct information.”

For spreadsheets, a new spreadsheet will need to be lodged with the cancellation indicator selected on row 39, according to the assistant commissioner.

“If you then need to report correct information, lodge another spreadsheet with only the correct events and information. For example, if you lodged a spreadsheet with 10 events, and two of these events contained errors, you will need to lodge two more spreadsheets: the first spreadsheet cancelling the two events with errors, and the second spreadsheet with the two replacement events with the correct information,” Ms McLachlan explained.

“Don’t include the correct information you originally provided to us again in either the cancellation or replacement spreadsheets. Once you have cancelled an event, it will no longer display in the member’s transfer balance account details online.”

Ms McLachlan warned that issues with the cancellation of incorrect information can cause the form to suspend, with the ATO having to contact the SMSF to resolve the matter.

“They can also lead to us considering information twice, duplicate reporting,” said Ms McLachlan.

It is important that SMSF trustees recognise that the transfer balance system treats each new report as a new event, she added.

“Therefore, the important thing to remember about correcting previously reported transfer balance events is to cancel the incorrect event before reporting the correct information,” Ms McLachlan said.

“If you don’t cancel the previously reported incorrect information, we won’t know it’s wrong and will treat the ‘amendment’ as a new event, thus resulting in duplication.”

She also noted that if SMSFs reported an event in error, they would need to cancel the event, rather than report the opposite event.

“For example, if you accidentally reported a pension twice, you need to lodge a TBAR cancelling the duplicate pension — not a TBAR reporting the duplicate pension as being commuted in full,” the assistant commissioner said.