The ATO has emphasised the restrictive nature of commutation authorities issued to SMSF members who have exceeded their transfer balance cap with regard to how SMSF members comply with them, as well as the adverse consequences involved with these actions.
During a recent webinar, the regulator highlighted this point by noting the detail contained in commutation authorities and how important this information is for superannuants.
“The commutation authority will detail the amount you must commute, the income stream you must commute it from, the issue date and the due date,” it said.
“The commutation authority only authorises you to commute the specified income stream.”
It detailed the unwanted consequences super fund members would face should they ignore the specifics of what is contained in the commutation authority.
“If you commute another income stream, you will not have complied with the commutation authority,” it warned.
“As this is a different income stream to that sent out in the commutation authority, you cannot report this as though you are complying with the authority.
“The member would be at significant risk of having their assets removed from retirement phase twice as this commutation does not remove the obligation to comply with the commutation authority.”
It also emphasised the critical nature of the 60 days after a determination regarding an excess transfer balance amount has been issued.
“This period between issuing the individual with a determination and issuing you with a commutation authority is the only opportunity we have to essentially stop the process while you correct any of the reporting errors or you report any missing events,” it said.
It said individuals can apply for an extension of the 60-day period they have to respond to an excess transfer balance determination, but warned superannuants to be mindful of this process.
“We cannot give them an extension of time to respond to the determination if we have already issued a commutation authority to a fund,” it said.