ATO to clarify reporting requirements for TBAR
Based on recent discussions with the ATO, it appears SMSFs with members who had both accumulation and pension phase accounts at 30 June 2017 may be required to report both account balances to the ATO via the TBAR, says a technical expert.
Speaking to SMSF Adviser, SuperConcepts executive manager of SMSF technical services Mark Ellem said following recent discussions with the ATO, it appears SMSFs with members who have both accumulation and pension phase accounts as at 30 June 2017, “will not only be required to report the 30 June 2017 pension balance to the ATO using a TBAR, but they will also be required to report the accumulation phase value as at 30 June 2017”.
“If this value is not reported using a TBAR we understand that the ATO will calculate the member’s total super balance by adding the pension balance reported by the TBAR to the member’s total balance reported in the SMSF annual return, which includes any retirement phase pension balance. In other words, their pension balance will be counted twice.”
Mr Ellem said he understands the ATO will shortly be clarifying the situation.
In order to stop a pension balance being counted twice, Mr Ellem said the SMSF will need to report the member’s accumulation phase value by completing question 15 on the TBAR.
“The ATO will then use this reported value and add to it the member’s transfer balance account value to arrive at the member’s total super balance,” he said.
This is a particularly important issue for SMSF members who may have commuted some of their pension balance on or before 30 June 2017 to comply with the $1.6m transfer balance cap, he explained.
“If they transferred that excess back to the accumulation phase, as at 30 June 2017 they had both an accumulation and pension interest in the fund,” he said.
Up until now, Mr Ellem said the sector had been working on the premise that the only 30 June 2017 balance that needed to be reported to the ATO via a TBAR was the member’s retirement phase pension balance.
“However, it now appears the member’s accumulation phase value also needs to be reported, where the member had both pension and accumulation phase values at 30 June 2017,” he said.
He reminded SMSF practitioners that the total super balance is important for determining a member’s non-concessional contribution cap, use of the bring forward rule, eligibility for catch-up concessional contributions, government co-contribution entitlement, tax offset for spouse contributions; whether an SMSF can use the segregated method to claim exempt current pension income and whether an SMSF is a quarterly or annual reporter for TBAR.