Move to real-time reporting more likely

real-time reporting transfer balance

Real-time reporting of transfer balance accounts is very likely and the SMSF sector will eventually move away from the reporting concessions currently provided, an SMSF expert says.

Concessions relating to the regularity of reporting transfer balance accounts within the SMSF sector are likely to be phased out to make way for real-time reporting, according to an SMSF technical expert.

SuperConcepts technical services and education general manager Peter Burgess said concessions that, depending on the size of the fund, allowed for events such as the commencement of a pension to be reported annually via a transfer balance account report (TBAR) were unlikely to be a permanent feature within the sector.

It was only a matter of time before funds moved to real-time reporting or more regular reporting to the ATO, Burgess added.

“There’s no mention of it yet, but I believe SMSFs will eventually be required to report information more regularly than they do now. It’s in their best interest, in my view, to report events as soon as they can,” he said.

“The sooner they report the information to the ATO, the more up to date the information is on the ATO website, which works to their benefit for tracking. If an SMSF hasn’t reported the start of a pension, for example, the ATO cannot keep their information up to date.”

He pointed to commutations as events funds would benefit from reporting sooner rather than later because of the impact they had on the balances within transfer balance accounts.

“They reduce your balance and provide more space to start a second pension,” he noted.

“If you’re not reporting them in a timely manner, you’re not getting a very accurate picture as to where you are currently at with your transfer balance or your cap.”

He also highlighted the benefits of more timely reporting of rollovers from SMSFs to Australian Prudential Regulation Authority (APRA)-regulated funds, given the higher regularity of APRA-related fund reporting compared to the reporting of SMSFs.

“For example, if you’re in pension phase in an SMSF and you decide you don’t want to be in an SMSF anymore, and you commute and roll over to an APRA-regulated fund, that fund will report the start of a new pension right away,” he said.

“However, the SMSF may not have reported the commutation of its pension. So, you end up with two pensions counted against a transfer balance account, which could give rise to an excess.”

Recently, calls have also been made for the ATO to supply real-time reporting back to SMSF advisers and trustees so they can be aware of their own fund positions when making decisions related to TBAR and to prevent breaches of the transfer balance account.

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