The tax office has locked in its views on real-time reporting requirements for clients with large superannuation balances, after months of contention.
ATO locks in new reporting requirements
This morning's decision references the new regime where SMSFs will be required to report those events which impact on a member’s transfer balance account on a real-time basis.
The ATO's implementation of SMSF event-based reporting from 1 July 2018 will be limited to those SMSFs with members with total superannuation account balances of $1 million or more.
From 1 July 2018, SMSFs that have members with total superannuation account balances of $1 million or more will be required to report events impacting members’ transfer balances within 28 days after the end of the quarter in which the event occurs.
This is not a transitional arrangement for SMSFs, professionals can proceed knowing this is the official ATO position.
The ATO’s verdict means about 85 per cent of the SMSF population will not be required to undertake any additional reporting outside of current annual reporting time frames.
Further, it means SMSFs will have significant concessions compared to APRA-regulated superannuation funds, which report relevant triggers 10 business days after the end of the month they occur.
“It’s worth noting that APRA funds are in a different situation to SMSFs,” ATO assistant commissioner Kasey Macfarlane told sister publication SMSF Adviser. “For example, they are operating in a much more automated environment.”
When the idea of excluding SMSFs with lower balances was first floated by outgoing ATO director Howard Dickinson last month, concerns were raised about the administrative burden of having carve-outs for some clients and not others.
In response, deputy commissioner James O’Halloran said the information that would need to be reported to the ATO is “not insignificant” and should already be well on the radar of trustees and professionals.
“Moving into pension phase is hardly a minor life event,” Mr O’Halloran also told sister publication SMSF Adviser.
“We have listened to the feedback, and we believe this strikes a sensible and reasonable balance,” he said.
Mr O’Halloran also quashed speculation that nil event reporting would be required in this new regime.
“It is important to restate that in all cases, regardless of the reporting time frame that applies, reporting is only required if an event that impacts a member’s transfer balance cap actually occurs – for example, when a SMSF member first starts to receive a pension from their fund,” he said.