Heffron has highlighted how clients will be impacted when TBAR reporting for SMSFs is streamlined from 1 July 2023.
The changes mean that an individual’s total super balance will no longer be relevant in determining the reporting deadline, and there will no longer be an annual reporting option.
This means that all SMSFs will be required to report 28 days after the end of the quarter in which an event occurred.
Head of SMSF technical and education services at Heffron Lyn Formica said that TBARs were still only required when a member had an event which affected their transfer balance account — such as the commencement of a retirement phase pension — and that there had been no changes to the types of events that should be reported.
Many SMSFs and their members would have only one or two TBAR events in their lifetime, Ms Formica said, but sometimes an SMSF should be lodging their TBARs even earlier than 28 days after the end of the quarter.
To better understand the impact of the TBAR changes she used an example of a man named Paul.
“He was drawing an account-based pension from his SMSF but recently made the decision to wind up his SMSF and rollover his benefits to an industry fund and commence a new pension in the industry fund,” said Ms Formica.
“The commutation of Paul’s pension in the SMSF and the rollover to the industry fund happened on 28 June, and Paul plans to start his pension in the industry fund the next day or so.”
“The industry fund has different reporting requirements to an SMSF and must report the start of Paul’s pension within 10 business days, and if the SMSF doesn’t lodge their TBAR to report the commutation until 28 July, Paul’s pensions will be double-counted and may cause him (and the ATO) to think he has exceeded his transfer balance cap.”
Ms Formica also said that now a decision to streamline TBAR reporting had been made the next step would be to look to improve the process as a whole.
Heffron is an independent SMSF specialist firm that helps trustees, financial advisers, and accountants use SMSFs as a retirement saving structure.
It has been an SMSF service provider for over 20 years and provides education, training, and technical support for advisers and accountants.
