Definitions and New Superannuation Terminologies
What is the Transfer Balance Cap (TBC)?
The Transfer Balance Cap (TBC) began on 1 July 2017. It is a lifetime limit on the total amount of superannuation benefits that can be transferred into the tax-free Retirement Phase account, including most pensions and annuities. For more information on the Transfer Balance Cap, please click here.
The general Transfer Balance Cap for a given Financial Year is as follows:
| Year |
General Transfer Balance Cap |
| 2021-22 |
$1.7 million |
| 2020-21 |
$1.6 million |
| 2019-20 |
$1.6 million |
What is a Retirement Phase Pension Income Stream?
Only pension accounts that are in the Retirement Phase count towards the Transfer Balance Cap. The following types
of Pension
Income Streams are considered as Retirement Phase Pension Income Streams:
Accumulation, and
Transition to Retirement Income Stream / Pension
(TRIS) where the member is under 65 and still working are NOT in
the Retirement Phase and therefore are not affected by the Transfer Balance Cap.
What is the Transfer Balance Account?
The Transfer Balance Account is the account that the Australian Taxation Office (ATO) uses to track the transactions
and
amounts in your retirement phase
across all Superfunds.
It operates similarly as a bank account in a sense that certain transactions give credits and debits to its balance.
The
balance in the Transfer Balance Account is calculated as the sum of credits less the sum of debits in the account.
Your Transfer Balance Account commences on either:
- 01 July 2017, if you were already receiving a Retirement Phase Pension Income Stream on 30 June 2017; or
- the day you first receive a Retirement Phase Pension Income Stream.
Excess Transfer Balance
If the balance of your Transfer Balance Account exceeded your Transfer Balance Cap, you would have breached the
Transfer
Balance Cap and have an
Excess Transfer Balance.
The ATO will estimate the notional earnings on your Excess Transfer Balance and require you to remove the excess
(including
notional earnings) from the retirement phase account. You will also be liable to pay tax on the notional earnings
attributable
to the excess capital.
For more information on how the notional earnings are calculated by the ATO, please click
here.
Excess Transfer Balance Determination
When you have an Excess Transfer Balance, the ATO will issue an
Excess Transfer Balance Determination which states the amount that needs to be removed from the
retirement phase
to bring your Transfer Balance Account back in line with your Transfer Balance Cap. This amount includes the
notional
earnings on the excess. The amount can be transferred into the Accumulation Account or withdrawn from your SMSF.
Commutation Authority
If no response has been made within 60 days after an Excess Transfer Balance Determination was issued, the ATO will
issue
a
Commutation Authority requesting the amount to be commuted.
Commutations usually occur in the following situations:
- When you make lump sum withdrawals (i.e. not pension withdrawals) from your Retirement Phase Pension Income
Stream.
- When you transfer your member balance from your Retirement Phase Pension Income Stream back into the
Accumulation
Account of your SMSF.
- When you roll out your member balance from your Retirement Phase Pension Income Stream to another
superannuation provider.
If you failed to comply with the Commutation Authority within 60 days after the Commutation Authority was issued,
your Pension
would be taken to have ceased at the start of that Financial Year as required by the superannuation legislation. As
a
result, you will lose the tax exemption benefits on your share of the SMSF earnings.
Transfer Balance Account Report (TBAR) – The New Event-Based Reporting Framework
What is the Transfer Balance Account Report (TBAR)?
Due to the Transfer Balance Cap measure, the ATO has imposed a new reporting obligation on SMSF Trustees so as
to record
and track the movements in the member’s Transfer Balance Account and apply provisions should the member breach the
Transfer
Balance Cap (TBC). This new event-based reporting framework is called the
Transfer Balance Account Report (TBAR). It is a separate form from the SMSF Annual Return.
Who should complete the Transfer Balance Account Report (TBAR)?
If your SMSF has a member who is accessing a
Retirement Phase Pension Income Stream, you will be required to comply with the new Transfer
Balance Account
Report (TBAR) framework.
The following types of Pension Income Streams are considered as Retirement Phase Pension Income Streams:
Accumulation, and
Transition to Retirement Income Stream / Pension
(TRIS) where the member is under 65 and still working are NOT in
the Retirement Phase and therefore are not required to comply with the Transfer Balance Account Report (TBAR)
Framework.
What events need to be reported under TBAR?
The following tables detail the events that affect the balance in the member’s Transfer Balance Account and whether
the events need to be reported to the ATO under the TBAR framework:
Reportable Events:
|
Event Type
|
Impact on the Transfer Balance Account
|
Required by TBAR (Yes / No)
|
| You commenced a new Retirement Phase Pension Income Stream |
Credit |
Yes |
| You made lump sum withdrawals (i.e. not pension withdrawals) from your Retirement Phase
Pension Income
Stream |
Debit |
Yes |
| You transferred your member balance from your Retirement Phase Pension Income Stream back
into the
Accumulation Account of the SMSF, known as Rollback |
Debit |
Yes |
| You rolled out your member balance from your Retirement Phase Pension Income Stream to
another superannuation
provider |
Debit |
Yes |
| You failed to withdraw the minimum pension before 30 June and were required by law to cease
the Retirement
Phase Pension Income Stream at the start of that Financial Year |
Debit |
Yes |
| You responded to an Excess Transfer Balance Determination issued by the ATO since you
exceeded your
Transfer Balance Cap |
Debit |
Yes |
| You responded to a Commutation Authority issued by the ATO since you failed to respond to
the Excess
Transfer Balance Determination within 60 days of its issue date |
Debit |
Yes |
|
Structured
settlement contributions made
after 1 July 2007 |
Debit |
Yes |
Non-Reportable Events:
|
Event
|
Impact on the Transfer Balance Account
|
Required by TBAR (Yes / No)
|
| Notional earnings on the Excess Transfer Balance |
Credit |
No – Calculated by the ATO directly |
| Death of a Member |
Debit |
No – ATO collects this information via other sources |
| Other Special Events. E.g.
|
Debit |
No – Trustees need to report this information to the ATO separately using the
Transfer
Balance Event Notification Form
|
| Investment earnings and losses on your superannuation interests |
No impact |
No – No impact on the Transfer Balance Account |
| Pension amounts paid to you |
No impact |
No – No impact on the Transfer Balance Account |
For a full list of the events that must be reported to the ATO, please visit the ATO website
here.
An Example:
Barney commenced an SABP with $1.2 million on 01 October 2021. He made a pension withdrawal of $250,000 on 01
February
2022. The balance in the pension account increased to $1 million on 30 June 2022 due to investment earnings.
Barney
then decided to make a lump sum withdrawal of $100,000 from the SABP on 30 June 2022.
Reportable Events
The events that need to be reported by Barney are the commencement of his SABP of $1.2 million and the lump
sum withdrawal
of $100,000. The pension withdrawals and earnings do not affect his balance in the Transfer Balance Account
and
therefore are not required to be reported.
Transfer Balance Account
His Transfer Balance Account is credited with the pension commencement amount of $1.2 million and then
debited with
the commutation amount (lump sum withdrawal) of $100,000, resulting in a transfer balance of $1.1 million.
Reporting Frequency and Due Date
The reporting frequency under the TBAR Framework is generally determined by the Total Superannuation Balances (TSB)
of
all members of your SMSF, except for two special events where the ATO has set a tighter
reporting time frame.
Report Sooner – Two Special Events
The following two events are required to be reported to the ATO within the specified time frame and the
reporting
due date is not affected by the Total Superannuation Balances (TSB) of the SMSF members:
|
Event
|
Reporting Due Date
|
| You responded to an Excess Transfer Balance Determination issued by the ATO since you
exceeded your
Transfer Balance Cap |
10 business days after the end of the month in which the Excess Transfer Balance is removed |
| You responded to a Commutation Authority issued by the ATO since you failed to respond to
the Excess
Transfer Balance Determination within 60 days of its issue date |
60 days from the date the Commutation Authority was issued by the ATO |
Depends on the TSB – All Other Events
For all the other events, the reporting frequency and due date are determined by the Total Superannuation
Balances
(TSB) of
all members of your SMSF at the later of:
- 30 June 2017 if a member had a pre-existing Retirement Phase Pension Income Stream (i.e. before 30 June
2017)
or where the SMSF first had a member who started their first Retirement Phase Pension Income Stream
during
the 2017/2018 Financial Year;
- 30 June of the Financial Year immediately before the SMSF first has a member who starts their first
Retirement
Phase Pension Income Stream.
If
at least one member of the SMSF has a Total Superannuation Balance of more than $1
million, the Transfer
Balance Account events for
all members of the SMSF must be reported within 28 days after the end of the
quarter in which the event occurs (i.e. Quarterly Reporting).
If
all members of the SMSF have a Total Superannuation Balance of less than $1 million, the
events can
be reported
annually
no later than the due date for lodging the SMSF’s annual return (i.e. Annual Reporting).
Importantly, once the reporting frequency is set, it will not change even if the Total Superannuation
Balances of
the members change to above or below $1 million in the future.
Example 1:
Barney and his spouse, Lisa are members of an SMSF. Barney and Lisa had a Total Superannuation Balance of
$1.2 million
and $500,000 respectively as at 30 June 2021. Lisa retires on 01 December 2021 and decides to commence a
Simple
Account Based Pension on the same day. Barney is still working and does not commence a Pension.
Lisa will start to have a Transfer Balance Account on 01 December 2021, which is the day she first starts to
have
a Retirement Phase Pension Income Stream. The reporting frequency in this case is determined by members’
Total
Superannuation Balances on the previous 30 June. Given that Barney’s TSB as at 30 June 2021 exceeded $1
million,
the SMSF is required to adopt the Quarterly Reporting. Accordingly, Lisa is required to report the
commencement
of her pension by 28 January 2022 (i.e. 28 days after the end of the quarter in which the SABP commences).
Example 2:
Barney is the sole member of his SMSF and he commenced a Simple Account Based Pension in the SMSF in the
2016 Financial
Year. His Total Superannuation Balance as at 30 June 2017 was $900,000. Given that he had a Retirement
Phase
Pension Income Stream before 30 June 2017, the reporting frequency is determined based on his Total
Superannuation
Balance as at 30 June 2017. Barney is eligible for Annual Reporting.
Barney’s Total Superannuation Balance increases to $1.1 million on 01 September 2021 due to investment
earnings and
he makes a lump sum withdrawal of $150,000 from the Simple Account Based Pension on the same day. Since the
reporting
frequency does not change once it’s set, even if Barney’s TSB exceeds $1 million, he can still report the
lump
sum withdrawal of $150,000 by the due date for lodging his SMSF’s 2022 Annual Return.
How to view your Total Superannuation Balance?
A member's
Total Superannuation Balance is essentially the sum of all their accumulation and
retirement phase superannuation
interests across all Superfunds.
If
all your superannuation interests are invested in the SMSF(s) administered by ESUPERFUND,
your Total
Superannuation Balance will be calculated by ESUPERFUND as part of the Annual Return Process. You can view
your
member balance via your Client Portal
here once
the Annual Return for the previous Financial Year has been prepared.
If you have superannuation interests invested in other Superfunds, you will need to contact these Super
Providers
individually to confirm your member balance as at 30 June.
We also advise that you can view your Total Superannuation Balance using the ATO online services through
myGov.
Alternatively, you may contact the ATO on 13 10 20 directly.
Summary
The following table summarises the reporting due dates for different Transfer Balance Account events
discussed above:
|
Event Types
|
All Members have TSB of Less than $1 million
|
At Least One Member has TSB of More than $1 million
|
| Respond to an Excess Transfer Balance Determination issued by the ATO since you exceeded
your Transfer
Balance Cap
|
10 business days after the end of the month in which the
Excess Transfer Balance is removed |
| Respond to a Commutation Authority since you failed to respond to the Excess Transfer
Balance Determination
within 60 days of its issue date |
60 days from the date the Commutation Authority was issued
by the ATO |
| Commence a New Retirement Phase Pension Income Stream |
No later than the due date for lodging the SMSF's annual return for the
Financial Year in which the
event occurs
|
28 days after the end of the quarter in which the event occurs |
| Lump sum / roll-back / roll-out from a Retirement Phase Pension Income Stream |
Reporting Attended by ESUPERFUND
We are pleased to advise that ESUPERFUND attends to the preparation and submission of the TBAR on your behalf
at no additional cost.
In order to collect information from you, please click here to visit the Client Portal – TBAR page and follow the
steps detailed below to provide information to our office.
Step One: Select the Reporting Frequency (i.e. Annually / Quarterly)
We advise that if based on ESUPERFUND’s available data, your SMSF must lodge TBAR quarterly, the frequency has been set
to ‘Quarterly’ and you cannot change the reporting frequency. Please proceed to Step Two directly.
Otherwise, ‘Annually’ is selected as the default option for your SMSF. However, if your SMSF meets all the quarterly
reporting criteria explained in the above section, you should change the reporting frequency to ‘Quarterly’.
Step Two: Complete the Action Required Item(s) before the Reporting Due Date If Applicable
The TBAR Summary table details all the TBAR events that are already known to ESUPERFUND (e.g. the commencement of new
Retirement Phase Pensions).
For some events, we only have data for the event date while the event amount is unknown. This is because additional
information is required from you to enable us to calculate the amount. These items have been marked as ‘Action
Required’. Please click the ‘Action Required’ link and follow the instructions accordingly to provide the additional
information to our office.
If there are no ‘Action Required’ Items, please proceed to Step Three directly.
Step Three: Add Reportable Events before the Reporting Due Date If Applicable
If apart from the listed events, there are other reportable events (see below), please click the 
button, complete all fields and then click ‘Submit’.
- Lump sum withdrawals (i.e. not pension withdrawals) made from the member’s Retirement Phase Pension.
- Member Balance rolled out from the member’s Retirement Phase Pension to another superannuation provider.
- Responding to an Excess Transfer Balance Determination issued by the ATO since the member exceeded the Transfer Balance Cap.
- Responding to a Commutation Authority issued by the ATO since the member failed to respond to the Excess Transfer Balance Determination within 60 days of its issue date.
Reporting Timeframe
If You Have Been Issued an Excess Transfer Balance Determination / Commutation Authority
If the ATO has issued an Excess Transfer Balance Determination, please remove the Excess Transfer Balance as soon as
possible.
Remember that you are required to report this event to the ATO 10 business days after the end of the month in which
the
Excess Transfer Balance is removed.
If the ATO has issued a Commutation Authority, please remove the Excess Transfer Balance as soon as possible.
Remember that
you are required to report this event to the ATO within 60 days from the date of issue.
Due to the tight time frame set by the ATO, you should provide information to ESUPERUND via the Client Portal – TBAR
page immediately after you have responded to the ATO’s Excess Transfer Balance Determination / Commutation
Authority and attach the ATO’s letter.
All Other Events
If your SMSF needs to lodge a TBAR annually, you must provide information to ESUPERFUND via the Client Portal – TBAR
page no later than the due date for lodging the SMSF's annual return for the Financial Year in which the event occurs.
If your SMSF needs to lodge a TBAR quarterly, you must provide information to ESUPERFUND via the Client Portal – TBAR
page within 28 days after the end of the quarter in which the event occurs.
How to view your Transfer Balance Account Balance after Lodgement by ESUPERFUND?
ESUPERFUND submits TBARs to the ATO via the Bulk Data Exchange (BDE) channel, which is generated electronically by our
system and transferred to the ATO directly. You will receive a notification in your Client Portal Inbox after we have
lodged any events.
We caution that if you have already reported the same event to the ATO by yourself, please contact ESUPERFUND via the
Client Portal Inbox immediately. We will then contact the ATO to cancel the event reported by ESUPERFUND to avoid
double reporting.
Please allow for at least 28 business days for the ATO to update the information in their system. After this period,
you can view your Transfer Balance Account Balance using the ATO online services through myGov or contact the ATO on 13
10 20 directly.
Events that ESUPERFUND Cannot Report on Your Behalf
We advise that ESUPERFUND can report most of the events to the ATO via TBAR on your behalf, except for the following
two
situations:
Retirement Phase Pension Income Stream with another Super
Provider
We advise that ESUPERFUND only attends to TBAR for Retirement Phase Pension Income Streams established by
us. If
you have a Pension (e.g. Defined Benefit Pension) with another Superfund, please contact them directly.
We advise that the following events should be reported
by the Trustees to the ATO directly using the
Transfer
Balance Event Notification Form. It is a separate form from the TBAR, therefore ESUPERFUND is
unable
to complete this Form on your behalf.
- If you have a Retirement Phase Pension Income Stream, but received a payment for a personal injury and
made a
structured settlement contribution to your SMSF before 1 July 2007.
- A family law payment split.
- The value of your Retirement Phase Pension Income Stream was reduced because of
an act
of fraud or dishonesty and the offender was convicted.
- The value of your Retirement Phase Pension Income Stream was reduced because
some or
all the assets supporting your Retirement Phase Pension Income Stream were made available to your
Trustee
in bankruptcy.