From this date, all funds will be required to report certain retirement phase income stream events to the ATO on an events basis. The new reporting requirement is a significant shift from existing arrangements. In general, funds will be required to report:
- credits that arise in a member’s transfer balance account when a member starts or begins to receive a retirement phase income stream;
- debits that arise when a member commutes a retirement phase income stream; and
- when the fund accepts a structured settlement contribution from a member.
These transfer balance cap (TBC) events will be reported via the ‘Transfer Balance Cap Report’ (TBAR) as an approved form within 10 business days after the end of the month in which an event occurs. Each credit and debit event will need to be reported separately.
However, the ATO is encouraging certain events to be reported prior to 1 July 2018 including (the mechanism to lodge a TBAR is not expected to be available until October 2017):
- any debit where an SMSF member is commuting an income stream because they have become aware they have exceeded their transfer balance cap;
- any debit that occurs prior to a member rolling over some or all of their retirement phase income stream out of their SMSF and starting a new retirement phase pension or annuity with another provider, and
- any structured settlement contributions made to the fund on or after 1 July 2017.
You must have reported the credit value and account details for each retirement phase income stream that existed on 1 July 2017 for each member of the fund on or before 1 July 2018. However, SMSF members will need to monitor the value of income streams to ensure they will not be in excess of the TBC from 1 July 2017 onwards.
The two consultation options are as follows:
Option 1, excludes certain events from the requirement to report events occurring in relation to a members’ transfer balance account within 10 business days after the end of the month in which the event occurred. These include, Income stream, commencement, Limited recourse borrowing arrangements, and Commutation Authorities.
Option 2, provides that for a period of time, SMSFs will have 28 days after the end of the relevant quarter to report all TBC events except for: the commutation of an income stream because the ATO have issued a member with an Excess Transfer Balance (ETB) Determination, or compliance or noncompliance with a Commutation Authority the ATO have issued. This option is expected to be transitional for approximately 2 years. After the transition period, all events will be subject to the 10-day requirement.