The Australian Taxation Office has warned that it is seeing “many errors” in reports it receives from self-managed super fund trustees relating to event-based reporting.
Under event based reporting rules, which took effect in July last year, SMSFs are required to report to the ATO if one of its members has an event which impacts on their transfer balance. These events include:
- the commencement of a new retirement phase income stream – generally account based pensions and transition to retirement pensions which are in retirement phase;
- full and partial commutations of retirement phase income streams;
- some limited recourse borrowing arrangement payments;
- personal injury contributions that qualify as structured settlements; and
- compliance with a commutation authority in relation to exceeding the transfer balance cap as issued by the Commissioner.
When all members of an SMSF have a total superannuation balance of less than $1 million, the SMSF can report this information when it lodges an annual report.
Otherwise, SMSFs must report events affecting members’ transfer balances within 28 days of the end of quarter in which the event occurred.
The ATO says SMSF trustees or their auditors must check the following, in cases where a member received a pension in 2017/18:
- that an appropriate condition of release was met;
- that the pension is valued correctly in the financial statements;
- the commencement date of the pension and any commutations have been properly documented;
- exempt current pension income has been correctly calculated with respect to the pension and any commutations which occurred during the year have been considered;
- the payments from the pension have actually been paid; and
- the minimum pension payment requirements have been met.
The ATO says: “Since transfer balance cap reporting commenced for self-managed superannuation funds, we have seen a high level of re-reporting from the sector. This is mostly in response to determinations and commutation authorities we have issued.”
Errors usually relate to the dates when a member was actually receiving a pension, dates of commutations and commencements dates of pensions.