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ATO issues tax assessments for excess transfer balance tax

ATO issues tax assessments for excess transfer balance tax

ATO
Miranda Brownlee
01 May 2018

The ATO has begun issuing excess transfer balance tax assessments to SMSF members and their professionals where members have previously received an excess transfer balance determination.

The ATO said that paper excess transfer balance (ETB) tax assessments are being sent to SMSF members or their professionals, and members will need to decide how to cover the liability.

“They can use assets from outside super or they can access their super and make a larger than usual one-off pension payment, make an additional commutation of their income stream or take a lump sum from any accumulation interest they hold,” the ATO explained.

As the member has prima facie met a condition of release, the ATO stated it does not need to issue a special release authority to funds to allow the individual to access their super.

“SMSF members may receive an ETB tax assessment even if they didn’t receive an ETB determination. If they have rectified the excess before they were assessed for a determination they are still liable for the ETB tax,” the ATO cautioned.

“ETB tax is calculated on the ETB earnings from when the individual started to have an ETB to when they are no longer in excess. The tax rate is set at 15 per cent for an ETB in 2017–18. This rate will increase to 30 per cent from 1 July 2018 for second time offenders per Section 5 of the Superannuation (Excess Transfer Balance Tax) Imposition Act 2016.”

The ATO reminded SMSF trustees and professionals that the ETB tax is due and payable 21 days after the assessment is issued.

“A general interest charge will accrue if any amount remains unpaid after the due date,” it said.

“SMSF members who were covered by the transitional rules and rectified in full on time will not receive an ETB tax assessment.”

ATO issues tax assessments for excess transfer balance tax
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