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ATO Amends Reporting Rules For SMSFs

by Mary Swire,, Hong Kong

09 November 2017

The Australian Taxation Office (ATO) has released further details of its plans to introduce event-based reporting for self-managed superannuation funds (SMSFs).

The ATO said that from July 1, 2018, the reporting requirements will be limited to those SMSFs with members with total superannuation account balances of AUD1m (USD769,176) or more. Affected SMSFs will be required to report events impacting their members' transfer balances within 28 days of the end of the quarter in which the event occurs.

Reporting is only required if an SMSF has one or more members in a pension phase, and one of those members has an event that affects their transfer balance.

SMSFs whose members' total superannuation balances are below this threshold can choose to report events which impact their members' transfer balances at the same time that they lodge their annual SMSF return.

There are tax consequences for individual members if they exceed their transfer balance cap. As of July 1, 2017, there is a limit on the total amount of superannuation that can be transferred into the retirement phase. The cap is currently AUD1.6m, and will be indexed periodically in AUD100,000 increments, in line with CPI.

Excess transfer balance tax is payable on the notional earnings associated with any excess.

Kasey Macfarlane, Assistant Commissioner, Superannuation, said that "without the additional visibility provided by event-based reporting the ATO won't be able to provide reliable services to warn people when they may be approaching the cap or at risk of exceeding the cap."

She added that the "greatest risk of not reporting on time is that individual members may inadvertently and unknowingly exceed the cap and be faced with an unexpected and increased tax liability."

Macfarlane told the annual conference of the Chartered Accountants Australia & New Zealand that "the proposed model doesn't require SMSFs to report investment earnings, gains, and losses more regularly."

"Similarly, it doesn't require reporting of member account balances more often; nor does it require more regular reporting of contributions or pension payments (including changes in the value of pension payments) … it does not require all 600,000 SMSFs in the system to report to the ATO every quarter or every month (whatever the case may be) and it doesn't require reporting of 'nil' events," Macfarlane explained.

According to ATO Deputy Commissioner James O'Halloran, "up to 85 percent of the SMSF population will not be required to undertake any additional reporting outside of the current annual reporting timeframes for the foreseeable future."

TAGS: compliance | tax | investment | pensions | tax compliance | retirement | Australia | tax thresholds | tax authority | services

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