The ATO says it will start sending out Excess Transfer Balance Determinations in January 2018 to individuals who have exceeded their Transfer Balance Cap and not rectified the excess amount.
These Excess Transfer Balance (ETB) Determinations will generally be based on information provided to the tax office by ARPA-regulated super funds, though some SMSF members may receive a determination.
“If the SMSF trustee has not already reported information to us for the member, that they must do so as soon as possible so we have all the information about the member’s circumstances. If additional time is needed, the member can request an extension of time,” said the ATO.
“The sooner the member removes the amount set out in the ETB Determination out of retirement phase, the less excess transfer balance tax they will pay.”
“They must commute the amount set out in the ETB Determination from retirement phase. Removing it by making a large pension payment will not result in a debit in their transfer balance account, so they will still be in excess of their transfer balance cap.”
“Unless they are commuting a death benefit income stream, they do not need to remove the amount set out in the ETB Determination from the super system. They can keep the excess in an accumulation phase account.”
“The trustee must ensure that the minimum pension payment standards are met at the time they commute the income stream.”
The ATO also reminded SMSF members, who have exceeded their Transfer Balance Cap by $100,000 or less on 1 July 2017, of the 31 December 2017 deadline to fix “small” excesses under the transitional rules.
“If SMSF members don’t meet this date, they will have to commute the excess capital and excess transfer balance earnings, and pay excess transfer balance tax,” said the ATO.