SMSF reporting, hot topics, tips & traps



The 2017 financial year saw the most significant changes in superannuation law for more than a decade. The introduction of new concepts including Total Super Balance and Transfer Balance Cap from 1 July 2018 had significant consequences for member superannuation balances in the 2017 financial year and for future periods. Further restrictions contributions were introduced, as well as new reporting obligations for superannuation funds.

In her paper, 'SMSF hot topics, tips & traps', presented at the SA Super Day in September, Shirley Schaefer (BDO), covered the changes that SMSF professionals will need to address with their SMSF clients in the 2018 and 2019 financial year (and for future periods).

The paper, excerpted in this post, also looks at some new SMSF issues that have arisen in the past year.

2018 Reporting Changes
The introduction of the Transfer Balance Cap (TBC) and the creation of Transfer Balance Accounts (TBA) for all superannuation members with the Australian Taxation Office (ATO) means that superannuation funds, including SMSFs need to report additional information to the ATO annual and on a regular basis.

The SMSF Annual Return for 2018 has been amended to allow SMSFs to report specific information about member account balances and in particular details about Retirement Phase Income Streams (RPIS) being paid by the SMSF to members.
The SMSF Annual Return still only requires a single ‘member account’ in the Member Information section of the annual return, but now has additional reporting requirements for the breakdown of member accounts. The split between Accumulation Phase Value (APV) and Retirement Phase Value (RPV) is required.

In addition, a further split of RPV balances between different types of pension accounts is required:
  • Non Capped Defined Benefit Income Streams (non-CDBIS), more commonly referred to as Account Based Pensions – entered at S2 on the annual return
  • Non Capped Defined Benefit Income Streams (non-CDBIS), more commonly referred to as Transition to Retirement Income Streams in Retirement Phase (TRISRP) – entered at S2 on the annual return
  • Non Capped Defined Benefit Income Streams (non-CDBIS), more commonly referred to as Market Linked or Term Allocated Pensions – entered at S2 on the annual return
  • Capped Defined Benefit Income Streams (CDBIS), more commonly referred to as Defined Benefit or Complying or Lifetime Pensions – entered at S3 on the annual return.
It is important to remember that Transition to Retirement Income Streams (TRIS) that have not met a full condition of release should not be shown as income streams, but should form part of the accumulation balance total. The total number of TRIS pensions is required to be reported. The TRIS pensions meet a full condition of release and become TRISRPs when the member turns 65 years of age, retires over their preservation age or cease an arrangement of gainful employment over age 60. 1

Transfer Balance Account Report (TBAR)

The Transfer Balance Account (TBA) is maintained by the ATO and is essentially a measure of pension commencements and pension commutations. The TBA is the ATO’s way of measuring a tax payer’s total superannuation pension accounts and allow the ATO correctly apply the Transfer Balance Cap (TBC) provisions.

In addition to the year end reporting of member balances in the SMSF Annual Return, the new superannuation legislation requires superannuation funds to regularly report specific transfer balance account events to the ATO.

All SMSFs were required to report member pension balances held at 30 June 2017 by the 30 June 2018. This allows the ATO to have a starting point for the new TBC regime, pension balances at 1 July 2017. Having made the initial reports of ‘opening’ pension balances, the ATO needs to be made aware of all events that occur to a member’s superannuation pension balance and that impact the TBA.

The following TBA events are required to be reported to the ATO:
  • New retirement phase income streams that have commenced (including death benefit income streams commenced)
  • Reversionary death benefit income streams (the value reported is the value at the date of death, the start date for the reversionary income stream – but this does not need to be reported until twelve months after the date of death of the member) limited recourse borrowing arrangement payments that affect the value of an interest supporting a retirement phase income stream
  • member commutations from a retirement phase income stream
  • compliance with a commutation authority issued by the Commissioner
  • personal injury (structured settlement) contributions
  • superannuation income streams that stop being in the retirement phase, for example because the trustee failed to meet the minimum pension payment standards for an income stream. 
The following are not TBA events and should not be reported to the ATO. These events or transactions may impact the value of the member’s pension account maintained by the superannuation fund but they do not impact the TBA:
  • pension payments 
  • investment earnings and losses 
  • when an income stream ceases because the interest has been exhausted 
  • the death of a member. 
There are additional events that are required to be reported by the members themselves. These events are reported to the ATO using a Transfer balance event notification form (TBEN). This will include the following events:

  • family law payment split 
  • a TBA debit event from fraud, dishonesty, or bankruptcy 
  • structured settlement contributions made before 1 July 2007.
Many SMSF balances and transactions are not maintained on a daily basis and reporting is only possible when the SMSF’s accountant or tax agent prepares the annual financial reports and income tax return. After much debate, SMSFs were provided with different reporting timetables for TBAR lodgement. The frequency of TBAR lodgement is based on a member’s Total Superannuation Balance (TSB).

A member’s TSB is defined as the total amount of superannuation held by an individual. While the
definition is somewhat complex, it can be simply described as:
  • the balance at 30 June of accumulation phase value of superannuation interests 
  • the balance at 30 June of the superannuation interests that supports an retirement phase income stream 
  • the amount of any rollovers in transit between superannuation funds on 30 June 
  • less: any personal injury or structured settlement contributions that have been paid into your superannuation funds.
Where a member of a SMSF has a TSB that exceeds $1,000,000, TBARs are required to be lodged on a quarterly basis. The relevant quarterly lodgement dates are:
  • 28th October 
  • 28th January 
  • 28th April 
  • 28th July
If TBA events have occurred during the 2017-18 financial year these should have been reported when the first quarterly TBAR was required to be lodged (28th October 2018).

Where all members of the SMSF have TSBs below $1,000,000 then the SMSF can lodge the TBAR on an annual basis (at the same time that the SMSF’s annual return is due to be lodged). This will mean that the lodgement timetable will be:
  • 31st October (where the previous financial year’s annual return was not lodged at the previous 30th June) 
  • 28th February (for funds established in the previous financial year) 
  • 15th May (for most SMSFs).
The frequency of reporting for the SMSF is determined at the time the first TBA event is required to be reported. It is important to note that once the frequency has been determined, this becomes the reporting timetable for the SMSF regardless of subsequent member balances.

It is also important to understand that the frequency of TBAR lodgement is determined based on any member of the SMSFs TSB. So even where member balances in the SMSF are below $1,000,000, if other superannuation balances are held outside the SMSF these need to be taken into account to determine frequency of reporting. Additionally only one member of the SMSF needs to have a TSB greater than $1,000,000 (not all members).

A SMSF may be required to report earlier to avoid excess TBA assessments. This will be important where a member is rolling over their SMSF balance to a large superannuation fund regulated by the Australian Prudential Regulation Authority (APRA). ARPA regulated funds are required to report on a more regular basis, and may report the TBA credit (new pension) before the SMSF has reported the TBA debit (the commutation of the pension).

Despite what looks like onerous reporting obligations for SMSFs, it is important to remember that TBARs are only required to be lodged if a TBA event has occurred. For many SMSFs already in pension phase, they will have reported 30 June 2017 pension balances and may not be required to make any further report over the life of the SMSF.

Her full paper is available to purchase here.

Shirley's session 'Super Reporting – What is in and What is out?' at the National Convention in March, looked at the implementation of the Transfer Balance Cap Regime, which has not been the last of the super changes over the past 18 months.

Since 1 July 2017 we have seen proposed changes to auditor reporting, non-arms length income (and expenses) and a SG Amnesty. This is on top of the new reporting requirements for Transfer Balance Accounts.

Shirley looked at where SMSFs and superannuation have landed since 2017's reforms and in particular how reporting obligations have changed, either by legislation or influence of case law.

You can access her paper 'Super reporting - what is in and what is out', here.

An auditor by training and a SMSF expert by choice, Shirley established a separate Superannuation division at BDO in 1996 to offer technical services to clients with SMSFs.

A regular speaker and author on SMSFs, she was the 2017 winner of the SMSF Adviser Awards for Specialist SMSF Accountant and the Editors Choice Award.

Shirley has also won SMSF Auditor of the Year for the Australian Accounting Awards in 2018 and Auditor of the Year for the Women in Finance Awards in 2018. She is an Accredited Specialist Adviser and Accredited Specialist Auditor of the SMSF Association; a Fellow of the Association of Superannuation Funds Australia; a Fellow of the CAANZ; a Registered SMSF Auditor; and a Registered Company Auditor.

1 Schedule 1 Superannuation Industry (Supervision) Regulations 1994

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