The proposal to implement a transfer balance account report (TBAR) for SMSFs includes the ability for the ATO to impose penalties for non-lodgement or late lodgement of this information.
“The suggestion is that there’ll be penalties [for non-lodgement] – up to five penalty units,” DBA Lawyers special counsel Rebecca James told delegates at the firm’s most recent strategy seminar in Sydney.
“Penalty units are currently $210 and that’s attached to the Crimes Act.”
The proposed punishment under the new reporting regime will see an SMSF given one penalty unit for each period of 28 days the event in question remains unreported, with the regulator being able to impose up to five units that would amount to $1050.
James warned the proposed TBAR penalty system will again put greater emphasis on advisers facilitating effective and proper communications with their clients to mitigate their business risk.
“The risk here is making sure, if they do introduce this penalty system, that members are fully aware of what needs to be reported and when, the time frame, and the penalties that could follow if they don’t,” she noted.
“Because if we’re doing something at the end of the year and we’re more than six months late reporting, then there’s going to be more than $1000 to pay.
“I can’t imagine members will be very happy [with that] and the pressure will be on advisers to make sure their clients have all been fully informed so they [won’t be able to] try to push those penalties back to the advisers.”
In regard to the TBAR itself, James emphasised each individual event resulting in a debit or credit to a member’s transfer balance account had to be reported separately.
To that end, she said if a member decided to start a $1.6 million account-based pension but at a later date received a $1.6 million death benefit pension, resulting in a decision to commute the initial pension and keep the death benefit income stream, three events would have to be reported rather than just one, reflecting her eventual pension status.
