The ATO has issued a checklist for SMSF auditors after witnessing the high level of re-reporting events since transfer balance cap reporting began in 2017.
The SMSF regulator said the “reporting was mostly in response to determinations and commutation authorities we have issued” and highlighted the key areas that created the report.
According to the ATO, the amended reporting usually indicated members had not received a pension during the 2018 financial year or the pension was commuted on 1 July 2017 so the member was never in excess.
It also said reporting resulted when a member commuted their pension before 1 July 2017 to avoid being in excess and the trustees had incorrectly included the commuted amount in their original reporting to the ATO.
Re-reporting also took place when a fund member commenced a pension during 2017/18, but the initial value reported to the ATO had been amended so the individual no longer exceeded their transfer balance cap.
“Approximately 39 per cent of the commutation authorities issued to SMSFs in the past 12 months since were revoked, including commutation authorities issued to APRA (Australian Prudential Regulation Authority) funds after SMSFs had corrected reporting errors,” the ATO stated.
Ahead of the end of the current financial year, it reminded SMSF auditors they should be checking:
- that an appropriate condition of release was met,
- that the pension is valued correctly in the financial statements,
- the commencement date of the pension and any commutations have been properly documented,
- exempt current pension income has been correctly calculated with respect to the pension,
- any commutations that occurred during the year have been considered,
- the payments from the pension have actually been paid, and
- the minimum pension payment requirements have been met.
It also reminded trustees they have an obligation to ensure their transfer balance account reporting was correct, supported by the correct documentation and aligned with their exempt current pension income claim for a year.
The ATO has also made it clear any transfer balance account report re-reporting by SMSF trustees for future income years will be closely monitored.