Since transfer balance cap reporting commenced for self-managed superannuation funds (SMSFs), the Australian Taxation Office (ATO) has continued to observe a high level of re-reporting from within the SMSF sector. This is mostly in response to determinations and commutation authorities that have been issued by the ATO.

In some instances, the amended reporting indicates:

the member was not actually receiving a pension during 2017–18;
the pension was commuted on 1 July 2017 so that the member was never in excess;
the member had commuted the pension before 1 July 2017 to avoid being in excess and the trustees had incorrectly included the commuted amount in their original reporting to us; and
the member commenced a pension during 2017–18 however the initial value reported to us has been amended so that the individual no longer exceeded their transfer balance cap.

The result of the amended reporting is that it typically results in the determination or commutation authority being revoked. According to the ATO, approximately 39% of the commutation authorities issued to SMSFs in the last 12 months since were revoked, including commutation authorities issued to APRA funds after SMSFs had corrected reporting errors.

It is this level of re-reporting activity that has seen the ATO ensure that auditors in their gatekeeper role heavily scrutinise these activities.

What auditors are to check during an audit

Due to the large number of amended transfer balance account reports (TBARs) that the ATO has been receiving for SMSFs, the Regulator is reminding auditors to check the following as part of the compliance audit in the case where a member received a pension during 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 (ECPI) 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.

Whilst the ATO is in a stage of ‘education’ with the TBAR requirements for SMSF, it is important to remember that trustees have an obligation to ensure that their TBAR reporting is:

true and correct
supported by the correct documentation
aligns with their ECPI claim for a year.

Any TBAR re-reporting by SMSF trustees for future income years will be closely monitored by us. We may request evidence of relevant documents and calculations to substantiate the TBAR amendment.

Be Smarter with your pension documentation

You can refer to more information about the event-based reporting requirements on the ATO website:

Smarter SMSF provides an extensive range of pension documents to support practitioners with the ongoing requirements of starting, stopping and maintaining income streams. This includes (but is not limited to):