In an online update, the ATO explained that it has recently updated the transfer balance cap system so that it shows the most recent information reported to the ATO by public offer funds, via the Member Account Attribute Service (MAAS) and Member Account Transaction Service (MATS), before the ATO issues a default commutation notice to an individual or a commutation authority to a fund.

The Member Account Attribute Services is the new service used by APRA-regulated funds to report changes to member accounts, including transfer balance account events.

The Member Account Transaction Service will is the service used for reporting member contributions or transactions that occur more frequently and at a transactional level.

“We have identified that when the transfer balance cap system draws on MAAS and MATS information, it is showing accumulation accounts as well as retirement phase accounts and adding these to the account hierarchy that the transfer balance cap system uses for the default commutation notice and commutation authorities,” the ATO cautioned.

Consequently, the ATO said that there is a small risk that it may issue a commutation authority to the fund in relation to an accumulation phase account.

It could also mean that the ATO issues a default commutation notice to a member that includes an accumulation account in the list of funds that it will send a commutation authority to if the member does not commute the amount set out in the determination in full by the due date.

“Default commutation notices and commutation authorities issued from Friday, 14 December 2018, may be impacted. A fix is expected to be deployed on 15 January 2019,” the ATO said.

The ATO said that where it identifies that it has issued a commutation authority in relation to an accumulation phase account, it will contact the fund.

Only one instance of this occurring has been identified so far, the ATO noted.

The ATO warned funds that have identified that the ATO has issued a commutation authority to them in relation to an accumulation account, not to action it.

“If you are contacted by a member who is concerned that we have included an accumulation phase account in the list of funds on the default commutation notice, you should advise the member this is an error and withdrawals from this account will not result in a debit in their transfer balance account,” it said.

“We do not intend to issue a commutation authority to you for this account.”