In an online article, Ms Denham explained that the common scenario for SMSFs is where the couple separates and the superannuation balance is subject to a payment split by transferring an amount out of the member-spouse’s account and paying it to the non-member spouse.

“Where the amount is to be paid from the member-spouse’s pension account, the pension will need to first be fully or partially commuted,” she said.

“The commutation is reported as a debit to the member’s transfer balance account (TBA) under the general rules via a transfer balance account report (TBAR).”

If the non-member spouse uses the member’s lump sum to start a new superannuation income stream, the new income stream will result in a credit to the transfer balance account of the non-member spouse — also reported under the general rules via a TBAR, she explained.

Ms Denham gave and example of two trustees of an SMSF, Don and Judy.

“Don is in receipt of a pension from the fund and his transfer balance is $1,000,000. In March 2019, he is required to transfer $500,000 to Judy as a result of their relationship breaking down — he transfers it from his pension account to her new account in a retail super fund,” she said.

“Don’s transfer balance is debited by $500,000 and now stands at $500,000. Judy decides to commence an income stream with the full amount she receives, and receives a $500,000 credit in her transfer balance account.”