An SMSF specialist has reminded practitioners of the superannuation law’s very strict nature with regard to incidents of fraud and the effect those situations have on a person’s transfer balance account.
“In relation to fraud, people are getting scammed and unfortunately it does happen. But to get a reduction in your transfer balance account, the person who has perpetrated the fraud needs to be caught and they need to be convicted,” Accurium senior SMSF educator Anthony Cullen noted during a technical webinar hosted today.
“Without that unfortunately it’s a bit of a loss for your transfer balance account.”
During the same presentation, Cullen highlighted the fact some events affecting a member’s transfer balance account should not be reported by the SMSF as an entity. Instead, they have to be reported by the member themselves and must be done so using a Transfer Balance Event Notification.
According to Cullen, one such instance is when a family law payment split obligation is imposed on an individual.
“What we’re talking about here is the actual split of pension benefits or pension payments and you’re more likely to see that in a defined benefit fund where there is no capital as such to split with your spouse, and so the way that would happen is that you would split the pension entitlements. So those events need to be reported by the member,” he noted.
“In the SMSF space, when we’re talking about account-based pensions, we generally end up splitting the capital.
“So I might commute my pension and pay some of that to my spouse, as part of the court order or binding financial agreement, and once [a pension is commuted in these circumstances], that’s something the trustees of the fund are reporting.
“So there is a differentiation between splitting pension payments and splitting pension capital.”
