Introduction
This page has been designed to answer some of the frequently asked questions on Transfer Balance Account Reporting (TBAR) and some of the functionalities in Class.
The TBAR enables the ATO to record and track an individual's balance for both their transfer balance cap and total superannuation balance.
Question 1: TBAR lodgment channels
What are the TBAR lodgment channels and which channel does Class support? Can we lodge the TBAR from Class directly to the ATO?
Answer 1
There are currently four channels you can report your TBAR obligations. Further information is available on the ATO website.
Lodgment method |
Description |
SMSF trustee or administrator |
Tax agent |
No. of TBAR Events |
No. of Members |
No. of Funds |
Bulk data exchange (BDE) |
Submitting a data file through the Business Portal or Tax Agent Portal |
Yes |
Yes |
Multiple |
Multiple |
Multiple |
Spreadsheet version |
Attaching the spreadsheet to a Tax Agent Portal mail message |
No |
Yes |
Multiple |
Multiple |
Multiple |
Paper report |
Lodging the report by sending the completed report to the address provided on the form |
Yes |
Yes |
4 maximum |
Single Member |
Single Fund |
Online form |
Lodging the TBAR form electronically through ATO online services |
Yes |
N/A |
4 maximum |
Single Member |
Single Fund |
Class currently only supports the electronic file upload to the Tax Agent Portal via BDE.
The industry is in talks with the ATO to develop a more efficient alternative to the options listed above, which would enable a software provider to be able to lodge the TBAR records directly to the ATO the same way that BAS and SMSF Annual Returns can be lodged currently. We will provide more details as they become available.
Question 2: Events to report through TBAR
What events are reportable through TBAR?
Answer 2
An SMSF is required to report the following events:
- 30 June 2017 accumulation phase value in some scenarios - refer to the following sections for more information
- retirement phase income streams in existence just before 1 July 2017
- any of the following events that occur on or after 1 July 2017
a. super income streams that have commenced in retirement phase
b. some limited recourse borrowing arrangement (LRBA) repayments*
c. pension commutations
d. compliance with a commutation authority issued by the Commissioner
e. personal injury (structured settlement) contributions
f. super income streams that stop being in the retirement phase, for example, because of the trustee failure to meet the minimum pension payment standards for an income stream.
The 2017-18FY SMSF Annual Return will provide the capacity for both Accumulation Phase Value (APV) and Retirement Phase Value (RPV) amounts to be reported in a single lodgment. The TBAR form will not be used for this reporting.
From 2017/18 FY onwards, APV is not required to be reported through TBAR as the APV will be captured in the 2018 SMSF Annual Return.
The APV can also be reported using the super transfer balance account report paper form by selecting the event type as 'Accumulation phase value' in item 15 of the form then completing the following 'Event details' section.
Question 4: Retirement Phase Value (RPV)
What is Retirement Phase Value (RPV) and is it reportable through TBAR?
Answer 4
The retirement phase value of a member's total superannuation balance is the balance of a client's transfer balance account, adjusted to reflect the current value of an interest in an account-based income stream at the end of 30 June of the relevant financial year.
The following retirement phase income streams are included in the balance of a member's transfer balance account:
- account based income streams
- capped defined benefit income streams' (special value used)
- deferred superannuation income streams that are retirement phase income streams
- transition to retirement income streams that are retirement phase income streams
- income streams that are not account based or capped defined benefit income streams, and
- death benefit income streams including reversionary income streams (special rules apply).
Valuations for transfer balance account purposes are determined:
- on 30 June 2017 for income streams commenced prior to 1 July 2017, or
- on the starting day for those income streams commencing on or after 1 July 2017.
Superannuation income streams (other than account based income streams) retain the value attributed to the transfer balance account.
For most SMSFs with only account based income streams, generally, the retirement phase value will simply reflect the current value of those income streams.
For the 2016-17FY, an RPV event should not be submitted. For the 30 June 2017 TSB, transitional legislation is in place under Section 307-230 of the Income Tax (Transitional Provisions) Act 1997, which means for a retirement phase interest, the transfer balance account balance as at 1 July 2017 is used to determine the retirement phase value.
The 2017-18FY SMSF Annual Return will provide the capacity for both APV and RPV amounts to be reported in a single lodgment. The TBAR form will not be used for this reporting.
Question 5: TBAR events in Class
Which reportable TBAR events will Class create automatically and which events will need to be entered through manual TBAR events?
Answer 5
The following table will provide a summary:
|
Reportable Events Description |
Class Function |
Common Events |
'Pre-existing' superannuation income streams in the retirement phase on 30 June 2017
|
Automated * |
New income streams in the retirement phase on or after 1 July 2017, including reversionary income streams |
Automated |
|
Commutations of retirement phase income streams |
Automated |
|
Converting of transition to retirement phase income streams,(TRIS) into the retirement phase |
Automated ^ |
|
Less Common Events |
Certain LRBA repayments |
Manual # |
Personal injury (structured settlement) contributions |
Upcoming |
|
Child death benefit income stream (including reversionary death benefit income stream) |
Automated (if established in Class) |
|
Income stream stops being in retirement phase |
Manual |
|
Commissioners commutation authority |
Manual |
* Automated means the TBAR event will be created by Class based on the transaction processed in Class (e.g. Pension Establishment, Pension Commutation).
^ Class will enhance the functionality to support for the TRIS conversion for TBAR purpose.
# Manual means users are expected to create a manual TBAR event in Class to report it to the ATO (e.g. LRBA repayments).
Question 6: Total Super Balance (TSB)
What is Total Super Balance (TSB)?
Answer 6
A member's 'Total Superannuation Balance' at a particular time is calculated by:
- The sum of:
- Accumulation phase values - the total value of superannuation interests that are not in the retirement phase
- Retirement phase values - the value of a member's transfer balance account (but not less than nil), adjusted to reflect the current value of account based income streams
- Rollover superannuation benefits - the amount of any superannuation benefits not reflected in accumulation phase or retirement phase as they have been rolled over and are in transit between funds
- reduced by the sum of any structured settlement contributions
For most SMSFs, the TSB is generally equal to the member's closing balance if the member does not have an interest in another super fund.
Question 7: Why TSB matters
Why does TSB matter?
Answer 7
The concept of ‘Total Superannuation Balance’, which commenced from 30 June 2017, is a way to value a member's total super interests on a given date.
A member's Total Superannuation Balance is relevant when working out the member's eligibility for:
- the unused concessional contributions cap carry-forward
- the non-concessional contributions cap and the two or three-year bring-forward period
- the government co-contribution
- the tax offset for spouse contributions
- Segregated asset method to calculate exempt current pension income (ECPI) for the SMSF
Total Superannuation Balance is generally calculated as at 30 June of each financial year. The first date it will be used to determine a member's eligibility for these measures is 30 June 2017.
For example, if the member's Total Superannuation Balance at the end of 30 June 2017 is $1.6 million or more, then the member's 2017–18 non-concessional contributions (NCC) cap is nil. Any non-concessional contributions the member makes in 2017–18 will be in excess of the NCC cap.
Question 8: When and how often to lodge TBAR
When and how often do you need to lodge TBAR?
Answer 8
The following table provided in one of the ATO's webinars will assist you to work out the TBAR reporting due dates for the 30 June 2017 balances in addition to the other reportable events which happened during 2017-2018 financial year:
Refer to the summary in the table below:
Reportable Events |
SMSF with all member TSBs* < $1.0m (Annual Fund) |
SMSF with at least one of the member TSB ≥ $1.0m (Quarterly Fund) |
30 June 2017 Retirement Phase Income Stream Balance |
On or before 1 July 2018 |
On or before 1 July 2018 |
Reportable events after 1 July 2017 that are not related to Excess Transfer Balance Determination (ETB) or Commutation Authority issued by the ATO |
No later than the due date for lodging the annual return (i.e. for most funds it will be 15 May each year) |
The later of 28 Oct 2018 or 28 days after the end of the quarter in which the event occurred |
A voluntary member commutation of an income stream in response to an ETB determination issued by the ATO |
10 business days after the end of the month in which the commutation occurs |
|
Commutation Authority issued by the ATO |
Within 60 days of date of issue of the commutation authority |
*The TSB balance is determined at 30 June immediately before each year the first member of the fund starts their first retirement phase income stream in that SMSF. Once the reporting framework is set, SMSF trustees will not be expected to move between annual and quarterly reporting due dates, regardless of fluctuations to any of its members' balances.
Are there any situations where you should lodge a TBAR event earlier than the required due date?
Answer 9
Yes, if your clients are in the following two situations, we encourage you to lodge TBAR as early as possible.
- A small breach of Excess Transfer Balance Cap of less than $100,000 as the legislation allows trustees to rectify the small excess before 31 December 2017 without being penalised. Say, if the commutation for excess is processed by 31 December 2017 in Class, although the actual lodgment due date for this commutation is on or after 28 October 2018, we still encourage you to lodge the voluntary commutation event as soon as you lodge the 30 June 2017 balances through the manual TBAR event or the paper form to avoid the ATO issuing an excess transfer balance determination.
- Any wound up funds after 1 July 2017 or the members rolled the money over to an APRA fund and subsequently commenced an income stream in the new fund. To avoid getting a transfer balance determination from the ATO, it is in the fund's best interest to lodge the voluntary commutation event earlier.
Question 10: Legacy Pension types
What are the legacy pension types which require special values rather than its closing balance for TBAR purpose?
Answer 10:
They are defined as capped defined benefit income streams (CDBIS):
- certain lifetime pensions, regardless of when they start
- certain lifetime annuities that exist prior to 1 July 2017
- certain life expectancy pensions and annuities that exist prior to 1 July 2017
- certain market-linked pensions and annuities that exist prior to 1 July 2017
In Class they are generally set up as complying pensions and/or term allocated pensions.
Flexi pensions are not one of the CDBIS. For flexi pensions, the TBAR value is to be recorded using the special value field and is worked out using the method set out in r.307-205.02(2) of the Income Tax Assessment Regulations (ITAR) 1997, not the 30 June closing balance.
The TBAR console will flag the pensions that will be required to record the special values if they haven't been recorded at the time when the tax finalisation is run. If the fund has completed the tax finalisation and has lodged the tax return for the 2016-2017 financial year without recording the special value, there is no need to re-run the tax finalisation or the period update to post it to the TBAR console.
Question 11: Reportable events not specifically addressed in the TBAR
What other events are reportable but are not specifically addressed in the TBAR?
Answer 11
The following events need to be reported to the ATO through a separate form called transfer balance event notification form:
- a payment for a personal injury and made a structured settlement contribution to the SMSF before 1 July 2007;
- a family law payment split;
- the value of retirement phase income stream was reduced because of an act of fraud or dishonesty and the offender was convicted; and
- the value of retirement phase income stream was reduced because some or all the assets supporting the retirement phase income stream were made available to the trustee in bankruptcy.
As these events are not part of TBAR electronic specifications, they have to be lodged manually using the ATO's approved form.
Question 12: Events not required to be reported in the TBAR
What events are not required to be reported to the ATO via the TBAR?
Answer 12
These events include:
-
- Pension drawdowns and other types of government assistance. These are not debits in the transfer balance account.
- Investment earnings or losses
- When assets supporting an income stream are exhausted
- Death of a member*
*Any reversionary income stream following on from the death of a member will need to be reported.
Question 13: Term Allocated Pension (also known as a Market-linked Pension)
Why Class does not generate a TBAR credit or debit for a Term Allocated Pension (also known as Market-linked Pension) on or after 1 July 2017?
Answer 13
Due to the uncertainty in legislation around the commutation value of a Term Allocated Pension (also known as a Market-linked Pension), Class currently does not generate Debit and Credit balances for these pension establishment or commutation events post 1 July 2017.
This is consistent with the ATO's SMSF News Alert 2018/3, where the ATO will not take compliance actions at this stage if the fund does not report the transfer balance account events of the commutation or the commencement of the new market-linked pension on or after 1 July 2017.
Users may consider using either a Manual TBAR Event (once the functionality becomes available) or lodge the debit or credit balance outside of Class should they wish to report them to the ATO.
Class will change its functionality should there be new development in either legislative or ATO interpretation.
Updates from August 2020, As the Treasury Laws Amendment (2019 Measures No 3) Bill got passed and clears the flaws in the legislation on TBAR debit for commuting a market-linked pension, Class will start to generate the TBAR debits and credits for market-linked pensions which started after 30 June 2017. Any events processed prior to the August 2020 Release will need to be deleted and reprocessed to generate TBAR credits (for establishment) and debits (for any commutation).
For existing market-linked pensions prior to 1 July 2017, users would still be required to use the manual TBAR event for any subsequent commutations.
Question 14: TBAR lodgment declaration
Will Class provide a TBAR lodgment declaration and who should sign the declaration?
Answer 14
Tax agents are generally required to Client declarations and lodgment online from taxpayers before they can lodge any reports to the ATO, whether it is through Class or outside of Class (such as using the Tax Agent Portal). The signed declaration can be provided electronically (e.g. such as an email) but must come from your client.
Class has built a TBAR declaration report to assist you to fulfill this obligation. This report serves two important purposes:
- It allows the trustees of the fund to give permission to a registered tax agent to electronically lodge TBAR records on their behalf to the ATO, through the Tax Agent Portal
- It can also be used for record keeping to capture the details of TBAR records lodged to the ATO
You may need to incorporate this report within your current client engagement or practice management processes. Given the periodic nature of TBAR reporting requirements (i.e. annual and quarter), you may wish to adopt a process similar to your BAS authorisations. This report is available at both the Fund Level and the Business Level under the Reports menu.
Question 15: Who can lodge the TBAR file?
Who can lodge the TBAR file?
Answer 15
Class only designed the TBAR file to be lodged by an authorised tax agent. It is imperative that you assign a tax agent to a fund in Class before a TBAR file can be created.
Generally, as a tax agent with an administrator AUSkey, the TBAR reporting permission in Access Manager is automatically enabled.
As a fund administrator using standard AUSkey, setup may not have the permission to lodge TBAR reports set as the default. The tax agent with administrator AUSkey will need to give the administrator with delegated administrator access and enable the permission to handle TBAR reports.
Question 16: Testing the TBAR file
Can I test the TBAR file before I lodge it?
Answer 16
Any TBAR file generated for lodgment can first be tested to check for any validation errors on the tax agent portal. It is recommended you always test the file before the actual lodgment.
After testing successfully, you can lodge the TBAR file using the same process by changing the lodgment option from 'Test' to 'Lodge' and acknowledge the declaration.
You can also enter an email address to get notifications from the portal.
Question 17: TBAR and ATO validation report
Why when I test lodge the TBAR file on the tax agent portal, the ATO validation report has 2 more records than the number of records in Class?
Answer 17
There are three types of data records included in the ATO validation report for a TBAR file lodgment:
- Intermediary data record (tax agent details)
- Member data record
- File total data record.
The number of records displaying in TBAR console for each TBAR file refers to the Member data record only. Therefore, the ATO validation report will always contain 2 more records, being the Intermediary data record and the File total data record. Refer to the TBAR file structure diagram and the file structure example from the TBAR specification below:
Question 18: TBAR File error
What happens if the TBAR file I tested or lodged encounters an error?
Answer 18
You should download the validation report and check for the errors. If you cannot resolve this error, you may need to send an email to support@class.com.au and attach the file you are trying to lodge along with the validation message.
Question 19: Delete or cancel the TBAR file
What happens if I delete or cancel the TBAR file?
Answer 19
If you delete the TBAR file, the relevant TBAR events will reappear in the TBAR Console. You should only delete a generated file if it has not been lodged through the tax agent portal.
Question 20: TBAR amendment
How does the TBAR amendment work?
Answer 20
To amend information already reported to the ATO through Bulk Data Exchange i.e. TBAR lodgment via a file upload, you must cancel the original TBAR record and then lodge a separate TBAR record with the correct information. After the information is corrected in Class, Class will create two new TBAR records, one contains the original information with a cancelled status and one contains the corrected information with initial status. However, the workflow is slightly different depending on the different scenario.
- Amendment to 30 June 2017 Balances: For amendments in relation to the 30 June 2017 balances (except for the special values related to certain legacy pensions) that have already been reported to the ATO, once the correction is done in Class that changed the 30 June 2017 balances, you will need to re-run period update and the tax finalisation, similar to what you would do to amend a tax return.
- Amendment to Special Value: For amendments in relation to the 30 June 2017 special values, you are required to update the special value in the fund in the relevant pension account then rollback and re-run the tax finalisation for 30 June 2017.
- Amendment to the event-based Reporting : For amendments in relation to event-based TBAR records and special value, for example, a pension was established after 30 June 2017 with the wrong components and the event is subsequently deleted and re-established in Class. By deleting the original pension establishment and re-establishing the pension with the correct balance, Class will create two new TBAR records automatically, one has a cancelled status with the original information, the second record contains the corrected information with the initial status.
Question 21: Tax finalisation and TBAR lodgment
As we have only just attached a tax agent to all our funds, will we have to redo the tax finalisation on all the lodged funds for 2017 so that the TBAR function is able to pick up the required data?
Answer 21
No. You don't have to re-run the tax finalisation in this case. The following three pieces of information can be updated independently of the tax finalisation for TBAR lodgments.
-
- ABN of the fund
- Assigned tax agent
- Member's address
These three items are mandatory information for a TBAR record. If any of this information is missing, the TBAR file generation will fail.
Question 22: Period Update and TBAR
In relation to reporting the TBAR events like commutation subsequent to 30 June 2017 as a modified event, will a period update need to be re-run for it to show up in the TBAR console?
Answer 22
No, a Period Update is not required to post the event based records and special values related to certain legacy pensions. However, a tax finalisation is required to post the 30 June balances to the TBAR console. This means, for a pension commutation event that is processed after the 30 June period update but before the tax finalisation, the relevant TBAR records will still be posted to the TBAR console after tax finalisation is executed.
Question 23: TBAR lodgment
Do we have to wait until all funds are finalised to lodge the TBAR or can we lodge TBARs in multiple batches?
Answer 23
You don't have to wait until all the funds are finalised to lodge the TBAR. TBAR files can be generated in multiple batches, however, tax finalisation is required to post the TBAR records of the 30 June balances (except for the special value) to the TBAR console before they can be generated in a TBAR file.
For legacy pensions that would require the users to record the special value for TBAR lodgments, if the tax finalisation has been run without the special value, Class will automatically create a TBAR record for the relevant pensions and flag it as incomplete in the TBAR console. You are required to record the value in the relevant fund before a TBAR file can be generated.
Navigate to Fund Level > Fund Dashboard
- Click on the relevant pension account on the Pension Widget
- Click Maintain Pension Establishment
- Click Pension Details
- Enter the special value
Question 24: TBAR reporting for 30 June 2017 take on funds
How will Class handle the TBAR reporting obligation for 30 June 2017 take on funds?
Answer 24
Class provides the ability to lodge the TBAR events that occurred during 2016-2017 financial year including the 30 June 2017 balances for funds that were administered outside of Class for 2016-2017 financial year.
Question 25: TBAR and structured settlement
How does Class capture TBAR records in relation to a structured settlement received on or after 1 July 2017?
Answer 25
Any contributions made on or after 1 July 2017, with an amount entered as a personal injury in the contribution events, Class will automatically create a reportable event with a TBAR debit record for the amount of structured settlement.
For structured settlement contributions received between May 2006 and 30 June 2017, the ATO would use the data received from the SMSF Annual Return lodgment to debit the member's transfer balance account. This means you are not required to report those events through Class to avoid the amount being double counted. If you are in doubt, you can contact the ATO to confirm whether this information has already been reported.
Question 26: Reporting non-reversionary death benefit income stream (non-child)
How does the non-reversionary death benefit income stream (non-child) reported for TBAR purpose?
Answer 26
The table summarises the reporting obligation for non-reversionary death benefit income streams
|
Before 1 July 2017 |
On or after 1 July 2017 |
TBAR Value |
30 June 2017 balance |
Purchase price of the death benefit pension |
Effective Date |
30 June 2017 |
Date in which the beneficiary is entitled to the income stream |
TBAR Event Type |
SIS - Superannuation Income Stream |
SIS - Superannuation Income Stream |
What happens if it is > $1.6m TBC |
Excess can be commuted and retained in the accumulation phase |
Excess must be cashed out as a lump sum |
Question 27: Reporting reversionary death benefit income stream (non-child)
How is the reversionary death benefit income stream (non-child) reported for TBAR purpose?
Answer 27
The table below summarises the reporting obligation for reversionary death benefit income streams
|
Before 1 July 2016 |
Between 1 July 2016 and 30 June 2017 |
From 1 July 2017 |
TBAR Value |
30 June 2017 balance |
30 June 2017 balance |
Value of the income stream as at the date of the member's death |
Effective Date |
30 June 2017 |
Date of deceased member (the transfer balance account credit arises 12 months after the date of member's death) |
Date of deceased member (the transfer balance account credit arises 12 months after the date of member's death) |
TBAR Event Type |
SIS |
IRS |
IRS |
What happens if the death benefit results in the balance of the recipient's RPIS > $1.6m TBC |
Excess can be commuted and retained in the accumulation phase |
Excess can be commuted and retained in the accumulation phase |
If the recipient has other pre-existing retirement phase income streams (RPIS), they may consider to:
Excess related to the reversionary death benefit income stream must be cashed out as a lump sum |
The 12 months' delay on the TBAR credit for the recipient does not change the TBAR reporting time frame. For example, if the member passed away on 15 July 2018 and the recipient is on a quarterly basis for TBAR reporting, the recipient is still required to report the TBAR event on 28 Oct 2018 but the TBAR credit will arrive on the recipient's transfer balance account on 15 July 2019.
Question 28: Child death benefit income stream
What additional information needs to be reported in relation to a child death benefit income stream?
Answer 28
The calculation of the transfer balance account for child death benefit income is quite complex . Refer to the ATO website for further information on Child recipients of a death benefit income stream.
Apart from normal death benefit income stream information, it needs to send the third party (the deceased parents) details, including the following:
- Tax file number
- Family name
- First given name
- Other given names
- Date of birth