“At the moment, they're getting rid of the concept of accumulation value and accumulation phase value and retirement phase value and that retirement phase value is linked to transfer balance account. However, if you've got an account-based pension, including a market linked pension, you replace the TBA debits and credits with the withdrawal value.”

He said effectively, for most members of an SMSF, there's going to be no practical change and TSB is still going to be the amount a member could have taken out and have been able to voluntarily cease their interest in the fund.

“What it will change is for those that have an old legacy defined benefit pension which hasn’t yet exited out under the five-year measure. That doesn’t currently change from year-to-year. It is a stagnant figure and is based on the TBA special credit for that defined benefit legacy pension,” he said.

“That is now going to change from year to year. It's going to be based on a family law calculation. However, that's only affecting a small cohort of clients, and that cohort is getting smaller as we see those taking advantage of the five-year legacy pension exit measure.”

Ellem continued that additionally under the new TSB definition, there will be changes to how a limited recourse borrowing arrangement interacts with the fund.

“One thing we don't include that we currently do for TSB – and this exclusion only applies for Div 296 purposes – is where a person's TSB is increased for the proportion of their attributable amount of a loan under an LRBA,” he said.

“Where you've had to include a figure in the member’s section of the SMSF return, and have had to add in a figure for the attributable amount that belongs to that member for a LRBA loan, whilst that will still be used for all other measures that rely on TSB, it won't be used for the purposes of calculating TSB for Div 296 purposes.”