Speaking to SMSF Adviser, BDO superannuation partner Paul Rafton explained that for clients who had to commute an amount to accumulation in order to bring their retirement phase account down to the $1.6 million, there is a rounding issue error occurring with certain software where it adds a couple of dollars to the transfer balance account amount.
“When clients do that commutation to the $1.6 million, some of the software we’re finding is coming up with $1,600,002 for whatever reason. It’s some kind of rounding error,” explained Mr Rafton.
“It’s a bit of a quirky one. I don’t think its a material issue, more of a nuisance factor but whether that triggers anything in the ATO systems when those balances are reported in the TBAR will be interesting.”
Mr Rafton said its unclear whether this would be automatic trigger for the ATO or whether they would apply common sense and recognise that its not a material amount and clearly a rounding issue.
ATO and common sense in the same sentence – oxymoron!
It is an issue…. we had a client over their cap by less than $1 due to a certain retail fund not allowing cents to be commuted on their forms and hence the client had rounded the wrong way. We received zero sympathy or common sense from the ATO and was told it’s $1.6M not $1.6M and then some. Only rectification options was to agree with the ATO’s commutation letter which included a couple of thousand in excess earnings or get the retail fund to re-report to the ATO the commutation to get under the $1.6M cap.
Which software is this?