Event-based reporting for SMSFs: What it means & how you can simplify it

Article by Alex Cattell

 

The introduction by the Australian Taxation Office (ATO) of the new events-based reporting for Self-Managed Super Funds means accountants must review transactions for their SMSF clients more regularly.

What exactly does events-based reporting for SMSFs mean – and how can it be simplified to make compliance easy?

Understanding the jargon in the new rules

The ongoing additional reporting obligations from 1st July 2018 require a Super Transfer Balance Account Report (TBAR) to be prepared for amounts moving into or out of retirement phase.

The purpose of this additional reporting is to assist the ATO to keep track of member balances for new measures introduced including the Transfer Balance Cap and Total Super Balance.

The Transfer Balance Cap (TBC) is the new limit on the amount of superannuation that can be transferred into retirement phase.  It applies from 1st July 2017.

Your pension account balances from all your superannuation funds are included when calculating this.  The cap will start at $1.6 million and will be indexed periodically in $100,000 increments in line with CPI.

The Total Superannuation Balance (TSB) is the total value of your accumulation and pension accounts across all of your superannuation funds.

Event-based reporting for SMSFs: What does it mean to you?

For individuals with a total super balance of more than $1 million, the fund has quarterly TBAR reporting obligations.

The TBAR must be lodged with the ATO within 28 days after the end of the quarter with the event.

This quarter is a big one, covering the period from 1st July 2017 to 30th September 2018, meaning that accounts need to be up-to-date for all quarterly lodgers.

For individuals with less than $1 million in total super balance, the fund must report by the time its annual return is lodged for the relevant year.

Which SMSF events do you need to report?

  • New retirement phase income streams;
  • Limited recourse borrowing arrangement payments where the property is used solely to support the pension, i.e. is a segregated pension asset;
  • Member commutations;
  • Compliance with a commutation authority issued by the Commissioner;
  • Personal injury (structured settlement) contributions; and
  • Superannuation income streams that stop being in retirement phase.

So the old model of reviewing a year’s transactions when completing the SMSF Annual Tax Return is no longer going to work.

How to simplify event reporting for SMSFs

Communicating movement of funds into or out of pension accounts to your accountant has never been more important!

Accounts need to be reviewed at least quarterly to ensure that any transactions giving rise to an event can be picked up and reported on a TBAR by the due date.

The good news is that the cloud software available for SMSF administration is amazing! It has live data feeds of bank transactions, share buys and sells, and investment portfolio data meaning that this transition to regular processing is very doable.

The information is available and up to date. Now it’s up to you, the client, to allow the shift to regular processing to happen!

Contact us if you have any questions in the meantime about event-based reporting for your SMSF.