Have You Heard About Transfer Balance Account Report Reporting?
For SMSFs, one new event-based reporting (EBR) framework has commenced since July 1, 2018. This reporting helps the ATO to administer the Transfer Balance Cap. The applicants generally need to start reporting to ATO under Entry-Based Reporting [EBR] framework when their first member commences a retirement phase income stream.
The Transfer Balance Account Report (TBAR) is best used for reporting certain events and is completely different from the SMSF Annual Return and Lodgement. This reporting also helps the ATO to record, track, and monitor the individual’s balance for both transfer balance cap and total superannuation balance.
The transfer balance cap applies from July 1, 2017, and henceforth. This limit is the total amount of superannuation that can be transferred in the retirement phase. The transfer balance cap starts at AUD 1.6 million which is indexed periodically in line with CPI. The amount of indexation that the SMSFs are entitled to would be proportionally based on the amount of the available cap space. In case, the SMSFs exceed your transfer balance cap, then they would not be entitled to any indexation benefits.
The SMSFs can continue to make multiple transfers in the retirement phase until the transfer balance cap is maintained. All the account balances are considered and counted when working in the transferred amount. Also, this is irrespective of the number of accounts being maintained.
It is advisable to use Super Transfer Balance Account Report [TBAR] when the SMSF wants to notify the ATO about the:
- Transfer balance account event occurrence.
- Correct information about the transfer balance account previously reported.
- The response of any commutation authority notices wherein any fund has been issued to Super Fund.
The ATO would use this information to adjust the member’s transfer balance account so as to correct the previous transfer balance cap provision application. On the other hand, ATO would not utilize this information in reporting your SMSF annual return for transfer balance cap purposes.
There is NO need for TBAR reporting in case of:
- A Member’s total superannuation balance information post on July 1, 2018.
- Report Cancellation which is already canceled.
Note: Any SMSF trustee can only report information about the member’s interest in the SMSF, not any other interests they have in different super funds.
How to Report and Lodge?
The applicants can lodge a TBAR report by:
- Online Form Lodgement
- Paper Report Lodgement
- Bulk Data Exchange
- Spreadsheet version (interim solution for tax agents only).
In the case of a reporting error, the SMSF needs to cancel the original event. To do so, they need to lodge a new form exactly how it was originally reported it which includes the incorrectly reported information. They will also need to fill an additional field to indicate that the current form is lodged as a cancellation of the previous one. This would enable the ATO to enable us to match your cancellation request to the original lodgment.
If the SMSF wants to amend the previously reported information, they would have to send two reports to ATO. The first report would be to cancel the previous filled form and the new report must be done to provide the correct information. In case of a previously canceled report and need to undo the cancellation effect, the SMSFs need to send a new report to restore the original information.
Note: In case of re-reporting, the SMSFs must ensure that they lodge the cancellation first and then send the corrected one to avoid duplication.
Summing up, to cope with the regular updations in SMSF, it becomes difficult for financial advisors to stay in trend while maintaining their clientele base. However, with the expert SMSF service providers in the market, it becomes easier to maintain and balance both at the same time.