No TBAR for family law, fraud cases

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Trustees hit with fraud, bankruptcy or family law cases must follow a separate process to the TBAR.

The ATO has clarified SMSF trustees who experience family law cases, fraudulent activity or bankruptcy that affects their transfer balance cap will be required to follow a separate process to the transfer balance account report (TBAR) regime.

“Not much has been said about what happens if there’s a family law payment split or a debit event because of fraud or dishonesty or bankruptcy,” ATO SMSF segment director Maria Iacopino told the Self-managed Independent Superannuation Funds Association (SISFA) Annual SMSF Forum in Melbourne last week.

“If someone has to report any of those types of events, they don’t do it through the TBAR.”

Iacopino explained trustees will need to lodge a transfer balance event notification (TBEN) in such instances.

“It must be the individual who lodges one of those forms,” she said.

“So if there is a family law payment split or a debit arising from fraud, then the individual must inform us of that event through the TBEN form, which is unfortunately only available in paper format.”

As previously reported in selfmanagedsuper, the ATO also announced at the SISFA SMSF Forum that it was working towards making data collected from the TBAR regime available to individuals and tax agents in early 2018.

In addition, the regulator will closely monitor the activity on the TBAR regime frequency, whether monthly or quarterly, in case it needs to be changed in order to be more effective.

“Whatever reporting model we do decide to go on, SMSFs will have a transitional period and during that transitional period, we will be evaluating what the effects are,” Iacopino said at the time.

“If we see that a lot of members are exceeding their cap, then we might decide to go from a quarterly to a monthly reporting frequency.

“But if we see that the effects are lower, then we might move from monthly to quarterly or even annual reporting.

“It really does depend on what evaluations we make during the transitional period we have.”

On 21 August, the ATO published its position paper requesting industry feedback on the two possible time-frame scenarios for SMSFs under events-based reporting.

The TBAR regime requires reporting by SMSFs from 1 July 2018, however, SMSFs are able to commence reporting to the ATO next month.

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