Practitioners are finding the treatment of reversionary pensions with regard to the transfer balance account a challenge from both a management and reporting perspective, the experience of a specialist sector help desk has shown.
“I still see some confusion about the 12-month deferral rule [for reversionary pensions]. Practitioners have got to remember it only applies to the timing of credit arising in the reversionary beneficiary’s transfer balance account, but it doesn’t affect the reporting deadline,” Accurium head of education Mark Ellem told selfmanagedsuper.
“So if a pension reverted on 1 December 2023, it has to have been reported by 28 January this year, but the transfer balance credit will not arise in the reversionary beneficiary’s transfer balance account until 1 December this year.
“So the 12-month deferral is about when the credit is applied to the beneficiary’s transfer balance account, but has no bearing on any reporting obligations.”
Ellem took the opportunity to remind advisers and accountants certain transition-to-retirement income streams can also be captured by the new transfer balance account reporting regime, whereby every SMSF must lodge this document with the ATO within 28 days of the end of the quarter in which the relevant pension transaction occurred.
“Don’t forget the transfer balance account report must include a transition-to-retirement pension that was not in retirement phase but moved into retirement phase, whether that is because a member had turned 65, met a full condition of release or unfortunately died, triggering a reversion to a surviving spouse,” he noted.
Further, he pointed out any transfer balance account event that occurred during the last quarter of the 2023 income year and within the first six months of the 2024 financial year should now have already been reported to the ATO.
Mark Ellem will be sharing more practitioner experiences at next month’s SMSF Professionals Day 2024, being co-hosted by selfmanagedsuper and Accurium. To find out more about the event and register, please visit https://www.accurium.com.au/smsf-professionals-day/ .
