ATO outlines new TBAR framework for SMSFs
The ATO has revealed details on how its streamlined approach for transfer balance account reporting will operate for SMSFs from 1 July 2023.
In November last year, the ATO initiated a consultation on plans to implement a streamlined framework for reporting transfer balance cap events.
There are currently two different time frames for transfer balance cap events-based reporting.
Under the current rules, SMSFs that have any members with a total superannuation balance of $1 million or more on 30 June the year before the first member starts their first retirement phase income stream must report events affecting members’ transfer balances within 28 days after the end of the quarter in which the event occurs.
When all members of an SMSF have a total superannuation balance of less than $1 million, the SMSF can report this information at the same time that its SMSF annual return (SAR) is due.
One of the proposals in the consultation was to move to a framework where all SMSFs report on a quarterly basis.
Following its consultation, the ATO has announced that from 1 July 2023 it will be streamlining TBAR for SMSFs by removing the total super balance threshold.
This means that all SMSFs will be required to report 28 days after the end of the quarter in which the event occurred.
The ATO stated that the obligation to report earlier will remain for:
- A commutation of an income stream in response to an excess transfer balance determination (10 business days after the end of the month in which the commutation occurred)
- A response to a commutation authority must be reported by the legislated due date, as specified on the notice.
SMSF trustees, it said, may choose to report transfer balance account events more frequently than the quarterly based timeframe.
“This allows individuals to better manage their transfer balance cap and avoid excess transfer balance tax. For example, this would be beneficial when the member rolls over their interest from an SMSF to an APRA fund,” the ATO noted.
Speaking earlier this year, Verante Financial Planning director Liam Shorte said he is still seeing a number of instances where transfer balance account events have not been reported within the required timeframe by SMSFs.
“I’ve seen a number of cases this year where people have taken money out in October or November, and they’re only telling their accountant now and the fund is over $1 million.”
With the ATO now moving to a single reporting time frame for all SMSFs, Mr Shorte said it will be critical for SMSF trustees to get in touch with their accountants on a more regular basis.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.