The ATO will not take compliance action against funds that have not reported a TBA event after the commencement of a new pension in the interim.
The ATO will not take compliance action in the short-term against super funds that have failed to report transfer balance account (TBA) events after the commutation and/or commencement of a new income stream.
The decision followed numerous challenges faced by funds when reporting market-linked pension commutations where the term has expired and a new pension has begun, according to an ATO update.
“In August 2020, we advised you in CRT Alert 042/2020 that, due to the delay in publishing our guidelines on calculating the value of the debit, we weren’t expecting any funds to begin to commence their retrospective reporting until November 2020 and we would issue further guidance. On 6 September 2021, the ATO published updated guidance on market-linked pensions,” the regulator said.
“Treasury has released exposure draft law to amend the regulations to allow commutations of certain capped defined benefit income streams to occur to comply with commutation authorities and address excess transfer balance amounts.
“In anticipation of this regulation change, funds who support these products should now prepare their transfer balance cap reporting/re-reporting of any commutations that have not yet been submitted using the new calculation.”
While the ATO said it will avoid taking compliance action, it expected super funds to start reporting new income streams once the regulations began to ensure the period in which affected members accrue excess transfer balance tax liabilities begins on or after the commencement of the regulations.
“This will allow appropriate tax outcomes for these individuals given their prior inability to comply with the transfer cap rules,” it said.
Super funds and their members with specific circumstances have been advised to seek guidance from their client relationship manager or team for further instructions to confirm when the fund planned to commence reporting.
“If the reporting is before the regulations commence, then your members should contact the ATO if they receive a determination and request an extension of time to make an election,” the ATO advised.
Additionally, the ATO has updated the content of its SMSF alerts in regards to the registration of a new SMSF or changes to an existing fund’s financial institution account details, electronic service address, authorised contact or members.
“The improvements to the alert messaging are a result of your feedback and will now provide greater transparency of any changes made. This will assist members, trustees and directors to make informed decisions and take action to mitigate potential fraud behaviour where changes were not requested by an authorised person,” it stated.
Tia Thomas
January 14, 2022
smsftrusteenews.com.au
