As part of the package of reforms commencing from 1 July 2017, superannuation funds, (including self-managed superannuation funds), will have new reporting requirements to allow changes in members transfer balance caps to be tracked in real time. A member’s transfer balance is the total amount of superannuation benefits in retirement phase, (i.e. paying a pension). The ATO has confirmed that only events which affect an individual member’s transfer balance need to be reported. Common examples include:
- Income streams, (i.e. pensions), that a member was receiving on 30 June 2017 which continue to be paid to them on or after 1 July 2017 and that are in the retirement phase, (this does not include transition to retirement income streams)
- New retirement phase income streams commencing on or after 1 July 2017; and
- Commutations of retirement phase income streams on or after 1 July 2017.
The time at which an SMSF is required to report will depend on the value of the member’s total individual superannuation balances. Total superannuation balance refers to the total amount of funds in superannuation for an individual which may be across more than one fund and partly in retirement phase and partly accumulation.
SMSF’s with all members total balances less than $1 million are not required to report during the year, and can instead report events which impact their members’ transfer balances at the same time that the SMSF is required to lodge its SMSF annual return, (usually 15 May of the year following the end of the financial year). They can report the event at the time it occurs if preferred.
On the other hand, funds with at least one member with a total superannuation balance above $1 million will be required to report events affecting members’ transfer balances within 28 days after the end of the quarter in which the event occurs. This could mean an SMSF with all member balances below $1m, is still required to report after the end of the quarter if at least one member has additional superannuation funds elsewhere totalling more than $1m.
The time at which a member’s total superannuation balance is valued is either 30 June of the financial year preceding the year the member first commences a retirement phase income stream, otherwise 30 June 2017 if a member was already in receipt of a pension at that date, or commences a pension in the 2017 -2018 financial year.
If a fund was paying a pension to a member as at 30 June 2017, and this continues to be paid into the 2018 financial year, (and is a retirement phase pension – not a transition to retirement pension), these must all be reported to the ATO by 1 July 2018, regardless of member total superannuation balance.
We will be providing further updates shortly to our superannuation fund clients, however in the meantime if you have any queries, please don’t hesitate to contact us.