He said the pending increase of the transfer balance cap (TBC) to $1.9 million will require a new rehome of reporting obligations for SMSFs and, in order to track an individual’s use of their TBC, a transfer balance account (TBA) will need to be created to record necessary transactions from the time they first have a retirement phase pension interest.

“Transactions are recorded based on the reporting of various events the most common being the commencement of retirement phase pensions and commutations from those pensions,” he said.

“But from 1 July 2023 there will be no distinction as all SMSFs required to report transfer balance account events will be considered quarterly reporters.

“This will also capture all reportable events that may have occurred in the 2022/23 financial year. In effect, all reportable events that occur from 1 July 2022 to 30 September 2023 will have a reporting date of 28 October 2023.”

He warned there will be no grandfathering of the old rules and funds that were previously identified as annual reporters will be quarterly reporters from 1 July 2023.

Additionally, existing quarterly reporters do not receive an extension to lodge and will still need to report events from the 2022/23 financial year on a quarterly basis.

From 1 July, the reporting dates will be 28 October, 28 January, 28 April and 28 July.

However, he said there will continue to be some instances where reporting must occur earlier, including commutations resulting from a member voluntarily responding to an excess determination which are to be reported within 10 business days after the end of the month in which the event occurs.

Also, commutations required due to the receipt of a commutation authority from the ATO must be reported within 60 days of the authority being issued.

“For those that still have their financial accounts processed on an annual basis, this may require a rethink in the way they deal with their accountant/administrator,” he said. 

“As it is often these professionals that assist with the lodging of the transfer balance account reports (TBAR), they will need to be aware of any events in a more timely manner.”

The need to report events does not necessarily require accounts to be up to date, although it is preferred, rather estimated values of the event can be lodged, with more accurate information reported via an amendment at a later date. 

“However, this does create inefficiencies as the reporting mechanism is often linked to the software the transactions are processed in,” Mr Cullen said. 

“Having to create ‘dummy entries’ in order to lodge a TBAR will result in double handling and increase the chances of errors occurring.”

Although the ATO has said a pension cannot commence any earlier than the date it is requested and lump sum payments (commutations) must be requested prior to the payment being made, Mr Cullen said there are still people looking to retrospectively apply commencements and/or commutations.

“Considering these transactions as part of processing the year-end accounts, rather than at the time they occur, may lead to the late lodgement of the TBAR,” he warned.

A late lodgement of the TBAR may result in a penalty of $275 which will apply for each 28 days that a report is lodged late up to a maximum of five penalties.

Transfer balance account reporting is akin to the requirement to lodge tax returns and activity statements in that, late lodgement may lead to penalties for failure to lodge on time. A penalty unit, currently $275, can apply for each 28 days (or part thereof) that a report is lodged late. Up to a maximum of 5 penalty units.

However, Mr Cullen said there is only a requirement to lodge if there are events that need to be reported. 

SMSFs will also have different obligations in regard to their reporting than APRA funds which are required to report TBA events within 10 business days.

“This has and will continue to create issues when superannuation benefits are being transferred between SMSFs and APRA funds, particular where pension commutations and commencements occur,” Mr Cullen said.

“Given the pending increase in the general transfer balance cap from 1 July 2023 and the implications for personal transfer balance caps, the sooner events are reported, the sooner these values can be correctly determined.”