The list of SMSF reporting requirements from the Australian Taxation Office (ATO) is short.

It covers 

• The SMSF annual return, preceded by a valuation of assets and an audit 
• Reports on transfer balance caps and transfer balance accounts
• Reports on changes to funding statuses, such as member or contact details or a shift to a corporate trustee structure
• Activity Statements for funds with GST or PAYG obligations
• PAYG reporting for some pension payments and lump sums

We’ll highlight recent changes and common pitfalls that trustees of self-managed super funds should be aware of. SMSF trustees are advised to get professional advice about complying and avoiding mistakes.

Annual Reporting to the Australian Taxation Office

The annual return is a combined report covering both taxation and compliance with super law and regulations. An audit precedes it. 

The Annual Return and the Auditor’s Report 

The auditor submits a report to the trustees – and a contravention report to the ATO if required. 

The audit report confirms the accuracy of the fund’s financial statements and their compliance with the fund’s investment strategy, valuation of assets, and financial position. The auditor also checks general compliance with super laws, including any relevant documentation such as the trust deed, trustees’ trustee declarations, and appropriate records of trustee meetings.

Some recent changes that affect compliance should be noted:

• Auditors must report on a fund’s compliance with SuperStream standards for rollovers or partial rollovers of funds both into and out of the fund.

• The wording of the trust deed must align with how the superannuation fund prepares its financial statements.

In the past, SMSF advisers could self-assess financial reporting requirements and prepare special purpose financial statements (SPFS). Under a new Australian Accounting Standard (AASB 2020-2), financial statements must be reported according to the General Purpose Financial Statements (GPFS) standard. 

Some trust deeds say financial statements will be prepared in terms of super regulations. This gives trustees some flexibility in reporting formats. If the trust deed refers more specifically to accounting standards or Australian Accounting Standards, the fund must comply with the GPFS standard. 

Member Statements in the Annual Return

Section F of the annual return contains information about each fund member. Trustees must report specific details about member account balances, including all sources of contributions into the fund. 

According to recently added requirements, trustees must report the following:

• How much of the member’s total superannuation balance is made up of funds in the accumulation phase (accumulation phase value or APV), and how much is in the retirement phase (retirement phase value or RPV). 

• Whether retirement phase income streams are made up of several different types of pension accounts from various sources.

• The total number of Transition to Retirement Income Streams (TRIS) – i.e., the number of members who have elected to access some of their accumulated superannuation balances before retirement. 

• Any outstanding amounts associated with limited recourse borrowing arrangements. 

Trustees must add TRIS amounts to the accumulation account. They form part of the retirement phase only 

• When the member meets a condition of release 
  • i.e., the age of 65, permanent retirement on or after reaching preservation age, permanent incapacitation, or terminal medical condition, or 
• If the TRIS is continued to a nominated (reversionary) beneficiary after the member’s death

Event-Based Reporting 

SMSF reporting requirements changed when the ATO introduced a Transfer Balance Cap (TBC) and created Transfer Balance Accounts (TBA) for all superannuation fund members when they move from accumulation into the retirement or pension phase. 

Superannuation funds have to report additional information about members in their annual return. They must also report regularly if there is an “event” related to transferring balances – i.e., the amount held in a retirement phase account.

Transfer Balance Cap (TBC)

The TBC limits the amount a member can transfer into a tax-free retirement phase account.

If a member has more than one pension fund or account, they are all added together to determine the total towards the cap.

The transfer balance cap was previously $1.6 million and increased to $1.7 million from 1st July 2021.

Individuals can see their personal TBC on the ATO online system (accessed via MyGov).

We should note that the SMSF Association believes that personal TBCs and the indexation method used to calculate them complicates an already complex area and is likely to lead to errors and breaches of limits. 

It has been submitted to the government to either simplify or remove this provision. It has also asked that financial advisers be given online access to their clients’ information if they have been granted permission.

Trustees may need professional advice to ensure that they remain within the limits. 

Transfer Balance Account (TBA)

The ATO maintains a TBA on behalf of all taxpayers who have commenced a pension. The starting balance was as of 30 June 2017 for already existing pensions.  Retirement phase pensions commenced after that date are added to the account balance, while any commutations reduce the balance.

The TBA is a record of transfers in and out of super accounts in the retirement phase. These transfers are called credit or debit events. The ATO uses the account to correctly maintain the member’s total super balance and to apply the provisions for transfer balance caps.

Transfer Balance Account Reports – TBAR and TBEN

Although SMSFs report member balances in the annual return, the ATO does not use this to update TBAs. 

Instead, updates are based on reports from both the SMSF and individual members. They are responsible for informing the ATO of any credit or debit event relating to the member’s pension balance. 

The SMSF report is called the transfer balance account report (TBAR). The member report is called the transfer balance event notification (TBEN).

Which events must the SMSF report via TBAR?

The SMSF must submit a TBAR for the following events:

• The commencement of new retirement phase income streams 
  • Including death benefit income streams

• The start of a reversionary death benefit income stream
  • The value reported is at the date of death
  • It is reported only 12 months later, to give the recipient time to make adjustments to avoid going over their own contribution caps

• A member commuting funds from the retirement phase income stream to a lump sum
  • If the commutation is in response to exceeding a TBC, it must be reported within 10 days of the end of the month in which it occurred or within 60 days if the ATO issued a commutation order 

• Personal injury structured settlement contributions 
  • This is where the member agrees to periodic (tax-free) compensation payments rather than a lump sum settlement following a personal injury from medical negligence, a traffic accident, etc.
  • These amounts are deducted from the member’s total superannuation balance

• Income streams that stop being in the retirement phase 
  • This can happen, for example, if the member decides to move back to the accumulation phase. This could be because they have returned to work. Or they may receive a death benefit income stream and need to ensure they can maintain a larger balance within the superannuation system.
  • In this event, the ATO removes the tax-free status for that income stream for the entire financial year  

• Payments on limited recourse borrowing arrangements (LRBA) 
  • If they affect the value of an interest supporting a retirement phase income stream

Which events must the SMSF not report via TBAR?

Certain events affect the value of the member’s account maintained by the SMSF but do not affect the TBA held by the ATO. The SMSF does not have to report them.

These events include:

• Pension payments 
• Investment earnings and losses 
• The ending of an income stream because the funds have been exhausted 
• The death of a member

Which events must the member report via TBEN?

Members must report:

• A family law payment split 
• A TBA debit event that results from fraud, dishonesty, or bankruptcy 
• Structured settlement contributions made before 1 July 2007

Activity Statements

The ATO issues activity statements so that businesses can pay several tax liabilities simultaneously, on one form.

Business Activity Statements (BAS) apply to funds registered for GST. They are lodged either quarterly or annually.

Funds will use BAS to report on

• Goods and services tax (GST)
• Pay as you go (PAYG) withholding
• PAYG installments

Installment Activity Statements (IAS) apply to funds that are not registered for GST but must pay quarterly PAYG installments or PAYG withholding.

Completing these statements requires very detailed recordkeeping and the application of the correct accounting formulas. 

Due Dates and Frequency of Reporting

The ATO website provides details of due dates for reporting:

• The annual schedule
• For TBA events 

However, SMSF reporting timetables depend to some extent on individual circumstances.

For example, the due dates for the annual return are generally October, February, and May. The date varies depending on whether this is the first year of your fund’s operation and whether a trustee or a tax agent is lodging the return. 

For event-based reporting, 

• The SMSF must start TBAR reporting to the ATO as soon as a member commences a retirement phase income stream. This is the first TBA event.

• Subsequent due dates and frequency of reporting depend on the total superannuation account balances of SMSF members at the time of the first TBA event.

• If any member of the SMSF has a total super balance of $1 million or more, TBARs must be lodged quarterly – October, January, April, and July.

• If no members have a super balance of $1 million, then the SMSF can do TBAR reporting with the annual return.

An SMSF cannot be sure of a member’s total super balance. Funds may be spread across multiple superannuation providers. A complete valuation of assets may not be possible at the start of retirement. Trustees may not know values until the SMSF’s audit has been completed.

Trustees may have to self-assess whether annual or quarterly reporting will apply. 

Once this frequency has been established, this becomes the timetable for the SMSF, regardless of future member super balances.

Some special events should be reported separately or sooner. 

This is usually to ensure that information from different sources can be correlated by the ATO and prevent double-counting or unnecessary commutation authorities from the ATO.

For example, 

• A member is rolling over their SMSF balance to an APRA-regulated fund. APRA funds report more regularly than SMSFs, so the TBA credit to the new fund may be reported before the TBA debit to the SMSF fund. The ATO may react by issuing an excess TBA assessment and a commutation order.

Even if an SMSF only reports annually, trustees must closely monitor events during the year to ensure that members do not exceed their caps. They may choose to report these events during the year to ensure that member TBAs are updated. 

Key Takeaways

SMSF reporting requirements have been extended and have become more complex. 

The ATO’s introduction of transfer balance caps and personal transfer balance accounts means that SMSFs and their members must strictly monitor and report all transactions or “events” in retirement phase accounts.

Trustees, SMSF accountants, and financial advisers with multiple SMSF clients may want to consider using expert SMSF administration services to assist them with this task.

SMSF Engine combines many years of SMSF expertise with sophisticated, cloud-based technologies. We keep member balances updated daily, identify potential compliance breaches in time, submit TBAR and BAS reports as they become due, and ensure that annual returns are submitted with minimum difficulty.  

Please contact Mark Phillips or Alex Polorotoff to find out how we can help you.