The ATO said these excess transfer balance (ETB) determinations will generally be based on information that APRA fund has reported to the tax office.
However, if an SMSF receives an ETB determination from the ATO, and the SMSF trustee has not already reported information to the ATO for the member, the ATO said they “must do so as soon as possible so that [the tax office] has all the information about the member’s circumstances”.
“If additional time is needed, the member can request an extension of time,” the ATO said.
“The sooner the member removes the amount set out in the ETB determination out of retirement phase, the less excess transfer balance tax they will pay.”
The ATO reminded SMSF trustees that they must commute the amount set out in the ETB determination from the retirement phase.
“Removing it by making a large pension payment will not result in a debit in their transfer balance account, so they will still be in excess of their transfer balance cap,” the ATO cautioned.
The ATO also clarified that unless the member is commuting a death benefit income stream, they do not need to remove the amount set out in the ETB determination from the super system.
“They can keep the excess in an accumulation phase account,” said the ATO.
“The trustee must ensure that the minimum pension payment standards are met at the time they commute the income stream.”
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