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We are deep in the SMSF silly season and by now, your firm SHOULD have lodged its first batch of quarterly Transfer Balance Cap Reports (TBAR) for the September 2018 quarter.

In our previous blog we detailed what the new TBAR reporting guidelines are and when a fund is required to report (quarterly or annually).

Click here to read our previous blog

However, since then, we have had a lot of enquiries regarding other aspects of the TBAR legislation. Below are some of the most frequently asked questions fielded by our team.

What are the Due Dates for a Fund’s TBAR?

Below is a table of the due lodgement dates for a fund that is required to lodge annually and quarterly:

Can a fund change its reporting frequency?

No. Once a fund has established its reporting frequency (quarterly or annually), it does not change.

The date in which this is determined is either:

• 30 June 2017 if a member had a pre-existing income stream or where the first member started their first retirement phase income stream during the 2018 FY, or

• 30 June the year before the first member starts their first retirement phase income stream

Below are some examples we have obtained from the ATO website. Further information can be found here.

Example #1

Facts

• Tam and Cho are the only two members of their SMSF. They have no other super interests

• On 30 June 2017, Tam’s total superannuation balance is $800,000 and Cho’s is $550,000

• On 4 February 2018, Tam starts an income stream valued at $700,000

Reporting Requirement

As no member of the fund had a total superannuation balance of $1 million or more as at 30 June 2017 (the year before the first fund member started an income stream), the SMSF is required to report any events that occur annually.

Example #2

Facts

• Gary has a total superannuation balance of $900,000 as at 30 June 2017

• He has two pre-existing income streams valued at $500,000 and $400,000 respectively and no other super interests

• Gary continues to make contributions and, as at 30 June 2018, his total superannuation balance is $1.1 million. On 1 July 2018, he commutes the two income streams and starts a new income stream valued at $1.1 million

Reporting Requirement

As Gary has a total superannuation balance of less than $1 million as at 30 June 2017, the SMSF is required to report any events that occur annually in line with their SMSF annual return for that year.

This will not change even though his total superannuation balance increases over time.

What do I do if a fund has no events for the relevant period?

In short – Nothing!

If a fund has no reportable events for the quarter or financial year (depending on reporting frequency), no action is required.

We can also confirm no “nil report” is required to be lodged.

Do you recommend more frequent processing for quarterly TBAR funds?

First and foremost we strongly recommend all firms manage their SMSF’s on a cloud based SMSF specific software application such as BGL360 or Class Super. Cloud based SMSF applications are a must in our opinion as it can allow for a firm to automate part of its SMSF’s administration process by obtaining data feeds. Furthermore, some “desktop” applications are no longer supported by SMSF providers which can therefore lead to your firm not having access to updates that will be available on the supported cloud based applications.

With TBAR now being introduced, and for some, quarterly TBAR, the necessity for a cloud based application has never been greater.

By switching to a cloud based application, a fund’s quarterly TBAR will be able to be completed in a far more efficient and timely manner due to the ability to obtain data feeds. Data feeds allow direct access to client data and limits the amount of documentation your client will need to provide on a regular basis.

Some cloud based applications also assist with categorising a fund’s lodgement obligations between quarterly and annual. This can save you the burden of having to individually look at each of your funds!

Conclusion

There is a lot to take in with all of this TBAR business, and we hope this blog has clarified some lingering questions you may have had.