For those of you who have a Self Managed Super fund, as trustees you should be aware of some recent changes effective from 1 July 2023. In most cases your wonderful Accountant or Administrator will look after these for you, but as trustees it is important to stay up to date with the legislative changes.
Quarterly TBAR (transfer balance account report)
All SMSFs are required to report on a quarterly basis, by lodging a transfer balance account report (TBAR). This applies regardless of the member’s total super balance (TSB). Any event that would impact a member’s transfer balance account must be reported.
This includes where:
a retirement income stream is commenced
commutations (in full or part) are made from a retirement income stream
a death benefit becomes payable to a beneficiary,
personal injury/structured settlement contributions are made.
The changes also apply where an LRBA is entered into with a related party, or in certain cases where an LRBA exists and a member meets a full condition of release. Other events and details to report can be found on the ATO website here.
Any unreported events that have occurred prior to 1 July 2023 must be reported to the ATO before 28 October 2023 via the TBAR. There is no requirement for SMSFs trustees to wait until that date to report those events and, in some cases, reporting early may be beneficial.
Note: There are some exceptions to the reporting timeframes where the SMSF trustee must report earlier as follows: ▪ 10 days to report voluntary member commutation of an income stream in response to excess transfer balance cap determination, and ▪ 60 days to report the trustee actioning a commutation authority issued by the ATO.
Rollovers must be done electronically
SMSFs have been required to make rollovers electronically via SuperStream since 1 October 2021. This relates to both making and receiving rollovers. Prior to 1 July, the ATO had been providing temporary relief from this requirement allowing trustees to continue using paper Rollover Benefits Statements (RBS) in some circumstances. However, this temporary relief ceased on 30 June 2023. From 1 July 2023, all rollovers must be done electronically. SMSFs must obtain an electronic service address (ESA) from an SMSF messaging provider. The ATO provides a list of SMSF messaging providers. Many SMSFs will already have an ESA, as it is needed for other purposes, such as receiving employer contributions, however not all of them will allow rollovers, you should check with your provider or on the ATO website.
Limited recourse borrowing arrangements
The interest rate for related party limited recourse borrowing arrangements (LRBAs) is increasing from: 5.35% to 8.85% for LRBAs over property, and ▪7.35% to 10.85% for LRBAs over listed shares. 2 SMSFs with related party loans will need to factor the increased loan interest payments into their cashflow and budgets for 2023/24. The LRBA safe harbour interest rates are based on the Reserve Bank of Australia’s lending rates for banks providing standard variable housing loans to investors.
General Advice Warning - This communication has been prepared on a general advice basis only. The information has not been prepared to take into account your specific objectives, needs and financial situation. The information may not be appropriate to your individual needs and you should seek advice from your financial or tax adviser before making any investment decisions.