Accounting, ATO, Pensions

Excess determinations not a disaster

Accountants who lodged transfer balance account reports (TBAR) for their clients on 29 October may receive an excess notice from the ATO, but should not panic, a technical expert has said.

Heffron SMSF Solutions head of SMSF technical and education services Lyn Formica said 28 October was the due date for quarterly reporting funds and those who lodged on 29 October may receive an excess notice four days after lodgement.

“It’s not necessarily a disaster,” Formica said at the Institute of Public Accountants 2018 National Congress in Sydney last week.

“It could very well be a reporting problem. There’s every chance that if you get an excess notice that something has gone wrong; something has been double counted.”

She said there could be a possibility a member has had a commutation, ceased the pension in one fund and rolled it over, however, the commutation had not been reported.

Accountants who receive an excess notice should contact the ATO to work out what has been counted in the TBAR as it could be a double-counting issue, she noted.

“Even if ultimately you end up with an excess, it’s not a disaster, you just need to get rid of it quickly,” she said.

This can be done by rolling some money back into the accumulation phase as receiving an excess notice can mean the member has exceeded the permissible limit in the pension phase, she said.

“Essentially, the client can get a penalty, but the penalty is 15 per cent tax on a notional earnings figure,” she said.

“Now they do use about 9 per cent as the notional earnings rate, which is probably what most of the funds are earning.”

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital