BT outlines TBAR implications with 6-member SMSFs

Speaking in a BT webinar, BT head of financial literacy and advocacy Bryan Ashenden said for SMSF clients considering adding members to their fund, if the measure is passed, advisers will need to guide clients through a range of important considerations.

One of the aspects they need to consider, he said, is how adding more members might increase the frequency of their transfer balance account (TBA) reporting.

“You increase the frequency of TBAR reporting as soon as you have a member in the fund with more than $1 million and you also have someone moving across into pension phase,” Mr Ashenden said.

While ideally events should be reported as soon as events occur to ensure balances and member information stays up to date, from a strict legal requirement, it’s likely the reporting will be more frequent, he said.

“You will also have more members in the fund, so it’s more likely that someone will trigger a reporting event,” he added.

Another important area of consideration, he said, is how the investment strategy for the fund will operate once further members are added.

“This starts off with the whole consideration of how investments in the fund will be dealt with. The more members we have, the more complicated it could be,” he said.

All the members may decide to simply have a pooled approach in terms of the investments in the fund.

“[Alternatively], each might decide to keep their investments separate from everyone else,” he stated.

“Or do you take a riskier position, particularly from an administrative perspective, and decide that some members will be pooled and other kept separate? How difficult will that become? This is very important once you start to get into those investment strategy considerations.”