TBAR transition may cause mix up with events, SMSF warned

From 1 July 2023, the total super balance threshold for SMSFs will be removed, meaning all SMSFs will be required to report 28 days after the end of the quarter in which the event occurred.

Speaking in a recent webinar, Accurium senior manager Matthew Richardson explained said the move to a streamlined reporting framework raises some important considerations around how SMSFs who currently report on a annual basis will transition to the new regime.

While the ATO hasn’t clarified certain details of how the transition will work, assuming the SMSF has until the date of the annual return to report events from the 2022–23 income year, this could see events being reported out of order, Mr Richardson explained.

This would be mean that where an SMSF who is currently an annul reporter has transfer balance account event during the 2022–23 financial year, this would only need to be reported by 15 May 2024.

“[However], from 1 July 2023, they then become quarterly reporters so anything that occurs from that date onward must be reported within 28 days of the end of the quarter,” he said.

“So, if you report all of these events in order and it leave to the end of the maximum amount of time you can report it within, then this event that happened in the 2022–23 year won’t be reported to 15 May 2024, which would be after those other events happened.”

This is where SMSFs need to be very careful, he warned, as reporting them in this order could lead to an incorrect assessment of the transfer balance account.

“This could mean that a member moves too much into a pension or ends up with an incorrect transfer balance account assessment,” he stated.

“It will be important to keep track of all those TBA events and not just rely on the ATO MyGov record so that you know what’s happening in order and what their balance is even if it doesn’t at a particular point in time line up with what the ATO shows.”