SMSF TBAR - Event based reporting

Please note that the TBAR is not required for superannuation members in accumulation phase only or for members with Transition to Retirement Pensions.

From the 1 July 2018, the Australian Taxation Office has introduced new type or reporting relevant to Self Manage Superannuation Funds, associated with the transfer balance cap measure. Since the reporting is based and associated with certain events, it is called event-based reporting.

The transfer balance account report (TBAR) is designed to report certain events and is separate from the SMSF annual return reporting. TBAR reporting enables the ATO to record and track members’ superannuation balances, for both the transfer balance cap and total superannuation balance, administering the tax consequences in case the transfer balances are exceeded.

TBAR reports the events of the SMSF members transfer balances as follows:

  • Member’s Super Income Streams (including value and type) on 30 June 2017 that
    - were in retirement phase on or after 1 July 2017
    - continues to pay income stream on or after 1 July 2017
  • Events that occur on or after 1 July 2017
    - details of new retirement phase and death benefit income streams (including value and type). Where a death benefit income stream is reversionary, the start date will be the date on which the member died
    - details of some limited recourse borrowing arrangement payments (including the value and date of each relevant payment)
    - compliance with a commutation authority issued by the ATO Commissioner
    - details (including value) of personal injury (structured settlement) contributions
    - details (including value) of commutations of retirement phase income streams that occur on or after 1 July 2017

If an SMSF member has a pre-existing income stream, TBAR must be lodged with the ATO on or before 1 July 2018. Pre-existing income stream is an income stream the member was receiving on 30 June 2017, the stream was continued to be paid to a member on or after 1 July 2017, and the member is in retirement phase.

From 1 July 2018, all SMSFs are required to report events affecting the members’ transfer balances. Timeframes for reporting are determined by the total superannuation balances of the SMSF.

SMSFs with members who only have an accumulation interest in the fund are not required to report transfer balance events, other than structured settlement contributions, until a superannuation income stream is commenced.

Where all members of an SMSF have a total superannuation balance of less than $1 million, such SMSF can report this information as a part of the Fund’s Annual Tax return.

SMSFs that have any member with a total superannuation balance of $1 million or more must report events affecting members’ transfer balances within 28 days after the end of the quarter in which the event occurs.

A Member’s total super balance will determine how often and when an SMSF need to prepare and lodge TBAR. For this reason, Trustees are required to self-assess and inform their SMSF provider of their total super balances including all of the below:

  • all accumulation accounts
  • all retirement phase accounts
  • all Super Funds

In a situation where an SMSF is required to lodge a quarterly TBAR but has no events (Five Events listed above) to report, then no TBAR is required to be lodged.

Transfer balance account events that occurred during 2017–18 financial year, should be reported when the SMSF'sfirst TBAR is due.

If the SMSF is reporting annually, TBAR will be due at the same time as the due lodgment date of the Fund’s tax return.

If the SMSF is reporting quarterly, TBAR reporting due date is 28 October 2018.

An SMSF is required to report earlier if a member has exceeded the transfer balance cap. SMSFs can choose to report events as they occur and in some instances are encouraged to do so, to avoid incorrect excess transfer balance determinations issuing.

To be able report transfer balance, SMSF needs to have the valuation of the income stream, which will be provided as a part of the Fund’s end of year financial accounts, i.e. tax return.

If SMSF is required to report the commencement value of the pension to the ATO within 28 days after the financial quarter in which the pension commenced, the trustee will not know the exact value of the pension on the date of commencement. For such cases the ATO provides “Valuation guidelines for self-managed super funds“ which specify that: “it is accepted that a reasonable estimate of the value of the account balance can be used when a pension is started part way through the year”.

To accept a ‘reasonable estimate’ of the starting value of an income stream the ATO requires the SMSF to record this value in its accounting records at the time of commencement.

For the ATO to accept the reasonable valuation estimates, the general valuation principles apply:

  • The valuation has to take into account all relevant factors and considerations likely to affect the value of the asset
  • The valuation is undertaken in good faith
  • The valuation uses rational and reasoned process
  • The valuation has to be presentable with solid explanation to a third party

In case the TBAR was not lodged on time, the Australian Taxation Office will issue penalty- so called “failure to lodge”. Generally, for SMSFs, this penalty is calculated at the rate of one penalty unit for each period of 28 days (or part thereof),up to a maximum of 5 penalty units (one penalty unit is currently equal to $210).

To find out more about TBAR please follow the ATO link and enter search TBAR: Event-based reporting for SMSFs

SuperEasy® clients can have their Annual Preparation and Lodgment of TBAR per member (with a maximum of four events for a member in one TBAR) organized for a fee of $350 (GST incl.), and for Quarterly Preparation and Lodgment of TBAR per member (with a maximum of four events for a member in one TBAR ) for a fee of $220 (GST incl.).

Alternatively, members can organize TBAR Lodgments with the ATO themselves by using the enclosed form and instructions from the ATO. To download the TBAR form click on the ATO link: Super Transfer Balance Account Report

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