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ATO, Superannuation

TBAR should be lodged when pension rolled over

TBAR pension rollover

Advisers assisting clients with a pension rollover to an APRA fund should lodge a TBAR at same time to avoid an ATO breach notice.

SMSF advisers should lodge a transfer balance account report (TBAR) with the ATO at the time of any pension rollover to an Australian Prudential Regulation Authority (APRA)-regulated fund to prevent the trustees receiving a breach notice, according to an SMSF strategy expert.

SMSF Alliance principal David Busoli said while the number of pension rollovers from SMSFs to APRA funds was not high when they did take place many trigger a breach notice due to the different reporting timeframes used by two superannuation sectors.

He pointed out the reporting concessions given to the SMSF sector, which allow funds to report annually – and often well after a rollover has taken place, are not consistent with the reporting timeframes of APRA funds that are required to report any transfers from other funds once they have been received.

“Under the ordinary course of events, SMSFs report quarterly or annually, but even if they report monthly, this can be an issue. There is no real solution except to report at the same time as the rollover takes place,” Busoli explained.

“This should not be too hard to do because for the rollover the fund accounts would be up-to-date and the numbers would be at hand.”

Busoli suggested this was an issue that SMSF advisers should be keeping an eye on and would become more prevalent as their clients aged triggering the potential need to move out of SMSFs into APRA-regulated funds.

“Advisers will probably not pay attention to this issue until it happens to their practice. Their thoughts have not yet crystallised in this regard but they will become aware they could have avoided a breach notice if the fund lodged the TBAR at the time of the pension rollover, but they will not make that mistake twice.”

Busoli also pointed out the ATO should not be held responsible for the report timing mismatch nor the issuance of breach notices as it only acts on the information it has at hand.

“The government wanted daily reporting but instead we got a carve-out which has created this problem. We can’t whinge about the concessions and no-one wants them to be removed but we can’t blame the ATO. It doesn’t know what is going on until we tell it what has happened, so the only practical solution is to report as soon as possible,” he concluded.

The ATO had flagged the need for timely reporting in late 2017 when it noted that SMSFs shoud report any events that impact on members’ transfer balances within 28 days after the end of the quarter in which the event occurs.

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