Exceeding TBC requires prompt action

exceeding tbc

Advisers must act quickly to clear up any issues for SMSF clients who are found to have exceeded their TBC under the new indexation rules that will soon apply.

Timing will be crucial for fund members exceeding their transfer balance cap (TBC) and advisers must act fast to iron out any issues for their SMSF clients, the ATO has said.

Pointing to indexation of the general TBC set to occur on 1 July, ATO superannuation director Helen Morgan said advisers with clients exceeding their TBC and considered the fund’s reporting had not been reflected in their transfer balance account should ensure any errors were corrected, or missing information reported, as soon as possible.

“The most important advice is to act promptly,” Morgan said during a recent ATO webinar.

“As always, review the excess transfer balance determination, remembering that your client and their individual agent can view all of the events that make up their transfer balance account.

“From 1 July 2021, you’ll need to review both why we consider they have exceeded their TBC and you may also need to look at how, and understand how, we have calculated their personal TBC.”

In addition, trustees and advisers should not assume a more lenient time frame would be applied in relation to the reporting of events after an excess transfer balance determination had been issued, she pointed out.

“The concession which allows SMSFs to report events no later than 28 days after the end of the quarter, or in line with their SAR (SMSF annual return) for the year in which the event occurred, does not apply once we have issued the member with an excess transfer balance determination,” she noted.

“If you need more time to understand the individual’s situation or for their fund to correct any reporting, the individual or their agent should contact us to request an extension of time, however, you should do this before the due date of your determination.”

She also said trustees and advisers needed to understand indexation of the general TBC would not affect all SMSFs in the same way and might result in increased complexity for some.

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