By 28th October, some SMSFs will need to have reported any pension establishments or commutations that occurred since July 1. These are the funds that have been self assessed as quarterly reporting for TBAR purposes.
To work out if quarterly or annual reporting arrangements apply, an SMSF will need to know the total super balance of all of its members at the later of:
- 30 June 2017 if a member had a pre-existing income stream in retirement phase or when the first member starts their first retirement phase income stream during the 2017–18 year
- 30 June the year before the first member starts their first retirement phase income stream. Currently, that is 30 June 2018.
Even when an SMSF has only one member with an individual total super balance of $1 million or more, it must report all events for all members within 28 days after the end of the relevant quarter, even if the balance of the first member to start a retirement phase income stream is below $1 million.
Once the reporting framework is set, SMSF trustees will not be expected to move between annual and quarterly reporting, regardless of fluctuations to any of the members’ balances.
So, what we need to identify is all those SMSFs that had any members with a total super balance of at least $1 million at 30 June 2017 and at least one member in retirement phase. We also need to identify those SMSFs that triggered this qualification at 30 June 2018 but only if a pension commenced from 1 July 2018 – but not if there was an existing pension at 30 June 2017 that did not trigger the quarterly reporting requirement because no member had at least a $1m total super balance at that time even though a member may now have a total super balance of at least $1m at 30 June 2018. Simple hey!
Just so you don’t think this is too easy there are additional timing considerations for other events such as when a member has exceeded their transfer balance cap and, to guard against double counting, whenever a pension is commuted to roll over to an APRA fund.
As the previous year’s accounts will probably not be completed by now a best estimate value can be used for both the total super balance and the pension starting balance. It will not need to be subsequently adjusted unless it’s significantly wrong.
Previously, it has been common for a pension to be commenced in the first quarter without any paperwork until the end of the year. This practice must change for affected funds. The paperwork must be completed now and a TBAR lodged as required. Pension payments can be made later.
Rather than having to distinguish between differing reporting timeframes we, at SMSF Alliance, will be lodging all TBARs, for all SMSFs, on a monthly basis from the beginning of the second quarter. We do not charge extra for pension administration.