The ATO has underscored three scenarios under which SMSFs will have to report to the tax office prior to the introduction of the events-based reporting system next year.
Subject to some very specific exceptions, SMSFs will not be required to commence events-based reporting of transfer balance cap debits and credits until 1 July 2018.
However, SMSFs will be required to report to the ATO if one of their members has had an event that impacts on their transfer balance account.
“It will be in the best interests of an SMSF member to report the following specific events prior to 1 July 2018 to mitigate the risk of an excess transfer balance determination being incorrectly issued to the member,” ATO assistant commissioner Alex Affleck said at the SMSF Association’s Technical Day in Sydney yesterday.
“First, when any debit where an SMSF member has commuted an income stream because they have become aware they have exceeded their transfer balance cap.
“Second, when 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 lastly, when any structured settlement contribution is made to the fund.”
Transfer balance account reports will be available to be submitted through the three channels of bulk data exchange, an online form or a paper form.
Affleck said the ATO acknowledged events-based reporting was currently a topical issue for the SMSF industry.
“Events-based reporting does sound daunting, but the idea behind it is that an SMSF will only report where there is an applicable event that triggers it, so funds won’t be asked to provide nil reports if no events have occurred,” he said.
“The whole premise or design of the transfer balance cap measure is to effectively look at these entries – credits and debits – and for an SMSF member who is close to that $1.6 million cap, it’s very important that they have that timely information.
“So the ATO is mindful of that in the law design … and we wanted to give you our latest thinking of where this is landing.”
