In good news for trustees of SMSFs and after much community consultation, transfer balance account event-based reporting (TBAR) will soon be streamlined for convenience. The current event based reporting framework for SMSFs commenced from 1 July 2018 and facilitated the administration of the transfer balance cap by the ATO. SMSFs were generally required to start reporting when its first member commenced a retirement phase income stream.

The TBAR allows the ATO to record and track an individual’s balance for both their transfer balance cap and total superannuation balance. That information is not extracted from the SMSF annual return, or any information shared through a rollover. Under the existing framework, an SMSF must report common events that affect a member’s transfer balance account when they happen; including:

• details of when a member commences a retirement phase income stream, and death benefit income streams;
• details of commutations of retirement phase income streams, and commutations of a pension that occurs before it is rolled over to another fund;
• details of limited recourse borrowing arrangement payments;
• compliance with a commutation authority issued by the ATO; and
• details of personal injury (structured settlement) contributions.

For SMSFs with members with a total super balance of $1m or more on 30 June the year before the first member starts their first retirement phase income stream, events must be reported within 28 days after the end of the quarter in which the event occurs. In instances where all members of an SMSF have a total super balance of less than $1m, the SMSF can report events at the same time as when the annual return is due.

An SMSF may be required to report earlier if a member has exceeded their personal transfer balance cap. For individuals who start their first retirement phase income stream on or after 1 July 2021, their personal transfer balance cap will be $1.7m. If no reportable events occurs, the SMSF is not required to report.

From 1 July 2023, TBAR will be streamlined by removing the total super balance threshold and requiring all SMSFs to report 28 days after the end of the quarter in which a reportable event has occurred (ie 28 Jan, 28 April, 28 July, 28 October). However, the obligation to report earlier will continue in cases where a commutation of an income stream occurs in response to an excess transfer balance determination. This will still be required to be reported 10 business days after the end of the month in which the commutation occurred.

Similarly, the obligation to report earlier will also continue for responses to a commutation authority, which must be reported by the legislated due date as specified in the notice. Under the new streamlined framework, trustees of SMSFs will still be allowed to report transfer account balance events more frequently if they wish. This may be beneficial in instances where members are close to their personal transfer balance cap, and will avoid excess transfer balance determinations.