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Reporting pension changes to the ATO

15-Nov-2018
With the introduction of the transfer balance cap of $1.6m designed to limit the amount of capital that can be transferred into the tax-exempt retirement phase, certain events that track the movement of capital in and out of retirement phase, as well as other events now must be reported to the ATO to ensure the correct amount is in the transfer balance account.

Pre-existing pensions that members were receiving before 1 July 2017 that they have continued to receive and which are in retirement phase on or after 1 July 2017 should have already been reported to the ATO. In addition, the following common events must now also be reported:

start of new pensions, which began to be in retirement phase on or after 1 July 2017;

full and partial commutation of a pension on or after 1 July 2017;

certain limited recourse borrowing arrangement (LRBA)        payments;

commutations in compliance with a commutation authority; and

structured settlement contributions.

So now that you know what needs to be reported, the next question is when or how often you need to report these events to the ATO.

This depends on whether your SMSF is on an annual or quarterly cycle and is determined by when the SMSF first starts to have a pension in the retirement phase.

Where each member’s total super balance is under $1m, the SMSF must report transfer balance events annually, usually when the SMSF annual return is due.

If any member has a total super balance of $1m or more, the SMSF must report transfer balance events 28 days after the end of the quarter in which the event occurs by lodging a transfer balance account report. Note, the report only needs to be lodged if there is an event to report, if there isn’t an event, the SMSF isn’t required to lodge a transfer balance account report.

However, if a member has exceeded their transfer balance cap, the trustee must report any commutations earlier (either 10 business days after the end of the month or by a specific date denoted on the commutation authority).

In addition, if you’re rolling your pension from an SMSF to an APRA fund, the commutation should be reported as soon as possible to prevent duplication due to different reporting times between APRA and SMSFs.



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