Are you ready for TBAR? We’ve got you covered with the facts.

Home / Business Advisory Archives / Are you ready for TBAR? We’ve got you covered with the facts.

reporting

By Brett Griffiths

brett griffiths

As you may be aware, there is now a limit or cap on the amount that can be transferred into retirement phase (that is, in a retirement pension accounts). This is known as the Transfer Balance Cap (TBC).

This TBC applies to all your superannuation interests, and not just those in the SMSF.

When a member starts or stops a retirement pension, it increases or decreases their Transfer Balance Account (TBA).

From 1 July 2018 the Australian Tax Office (ATO) is implementing a new reporting regime to regulate this measure.

An SMSF must report events that affect a member’s transfer balance, including:

  • A pre-existing Retirement Phase Pension (RPP). This is where a member is in receipt of a RPP on 30 June 2017 that continued to be paid to them on or after 1 July 2017
  • RPPs commenced after 1 July 2017
  • Some limited recourse borrowing arrangement payments
  • Compliance with a commutation authority issued by the Commissioner
  • Personal injury (structured settlement) contributions
  • Commutations of RPPs (either partly or fully)

This reporting occurs on the Transfer Balance Account Report (TBAR), which is a separate form from the SMSF Annual Return which Vincents prepares on your behalf each year.  The TBAR enables the ATO to record and track an individual’s balance for both their TBC and Total Superannuation Balance (TSB).

How often and when you need to report

If an SMSF member has a pre-existing retirement pension, it must be reported to the ATO on the TBAR on or before 1 July 2018.

From 1 July 2018, all SMSFs must report events that affect their members’ transfer balances. Timeframes for reporting are determined by the Total Superannuation Balances (TSB) of the SMSF’s members:

An SMSF is required to report earlier if a member has exceeded their transfer balance cap (i.e. they have commenced retirement pensions with more than $1.6 million)

Any SMSF can choose to report events as they occur and in some instances are encouraged to do so to avoid incorrect excess transfer balance determinations being issued. This is particularly relevant when members in retirement phase transfer between superannuation funds.

If the ATO records indicate the member has exceeded their TBC, they will issue an Excess Transfer Balance (ETB) determination which must be complied with.

How to determine the member balance criteria

To work out if the quarterly or annual arrangements apply, an SMSF will need to understand the TSB of all of its members when the first TBAR is lodged, being the later of:

  • 30 June 2017 – if a member had a pre-existing RPP or where the first member starts their first RPP during the 2017–18 year; or
  • 30 June the year before the first member starts their first retirement phase income stream.

What events are to be reported

  • A pre-existing Retirement Phase Pension (RPP). This is where a member is in receipt of a RPP on 30 June 2017 that continued to be paid to them on or after 1 July 2017
  • RPPs commenced after 1 July 2017
  • Some limited recourse borrowing arrangement payments
  • Compliance with a commutation authority issued by the Commissioner
  • Personal injury (structured settlement) contributions
  • Commutations of RPPs (either partly or fully)

Examples

Want to know more?

Transfer Balance Account Report (TBAR) or event based reporting will have the biggest impact on SMSF reporting since the introduction of “A New Tax System” (GST) back in 2000.

If you would like to know more about transfer balance account reporting, please contact Brett Griffiths our Superannuation Advisory Director for assistance.

An Important Message

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents.  Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

 

 

Related Posts
salary packagingnegative goodwill