Reporting standards for TBARs

The ATO had originally required TBARs (transfer balance account reports) to be submitted to the ATO within 10 business days of the end of the month in which the relevant transaction occurred.  For example if a new pension commenced on 2 January 2018 then the TBAR report for this transaction must be lodged by 14 February 2018.

The ATO has now modified its original position for SMSFs. This administrative concession is set out below.

2017/18 financial year

TBAR reporting is not required for events which (but the ATO concession) would be required to be reported.  However, SMSF trustees can submit reports from 1 October 2017 in respect of reportable events which occur in 2017/18.

Not being required to lodge TBAR reports does not mean that the SMSFs can ignore the issue of excess pension balances.  The trustee must show that they have managed the excess pension position of their members.

The general concession applying to SMSFs in 2017/18 is subject to two exceptions:

• The first exception is where the ATO issues an excess transfer balance determination to a member (this will occur if the member exceeds the $1.6m transfer balance account cap) and the member decides to commute a pension being paid by the SMSF.  In this case, the SMSF must lodge a TBAR in respect of the commutation of the pension.  This TBAR must be lodged within 10 business days of the end of the month in which the commutation occurred.  Additionally, if the member is commuting a pension which has not been reported to the ATO, the SMSF must also issue a TBAR in respect of the commencement of the pension to be commuted (or its value as at 30 June 2017 if commenced before 1 July 2017).
• The second exception applies when a commutation authority is issued to the SMSF (whether by the member or the ATO).  In this case the SMSF must issue a TBAR within 60 days of the commutation authority being actioned.  However, there is no need to issue a TBAR in respect of the commencement of the pension which has been commuted as the ATO is already aware of its existence given it has issued a commutation authority in respect of that pension.

2018/19 and following financial years

If the SMSF has at least one member whose total superannuation balance is $1m or more (immediately before the commencement of the relevant financial year) then TBARs must be issued within 28 days of the end of the financial quarter in which the relevant event occurred.

If the SMSF has no member whose total superannuation balance is $1m or more (immediately before the commencement of the relevant financial year) the TBARs in respect of events which have occurred during the financial year must be lodged at the same time as the annual fund return of the SMSF is lodged for that financial year.

In either case the SMSF trustee may, if they so wish, lodge a TBAR before the mandated dates.

It should be noted that the concession is about the date on which the TBARs are required to be lodged.  The concession does not alter the effective date on which the reportable event occurred.  If and when the relevant TBARs are lodged (possibly many months after the relevant event), the ATO may determine that the member has had an excess pension position for many months.  The greater the period between the excess pension arising and the calculation of the transfer balance account position, the greater the tax penalty will be and, also, the greater the amount which will have to be commuted to reverse the effect of having derived earnings on the excess pension amount.