The amount of reporting required under the Transfer Balance Account Reporting (TBAR) system could be dramatically larger than expected, according to an analysis by Class.
The latest Class SMSF Benchmark Report found that TBAR reportable events could rise by 340%, drive by a “surge” in pension commutations.
Under the TBAR requirements – which are still being determined – the establishment and commutation of superannuation pensions may have to be reported in the month after they occur, compared to the almost two years allowed by the SMSF Annual Return cycle.
The major reason for the higher than expected volume of TBAR reporting is that over 50% of SMSF pensioners draw more than the minimum pension payment each year. Class expects that many of these people are likely to make commutations to maintain space under the $1.6 million Transfer Balance Cap, to allow for additional contributions.
Class CEO Kevin Bungard said SMSF professionals could be “sunk” by this second wave from the recent superannuation reforms.
“The volume of reporting that will be required is much bigger than you might think and people will be sunk without the right technology in place,” said Mr Bungard.
“The industry and the ATO are discussing how the impact on SMSF administrators will be managed but TBAR reporting will not go away because it’s vital to the integrity of the new Super Reform pension caps.”
“It is absolutely essential that SMSF accountants and administrators have highly efficient reporting and administration in place to be able to promptly and accurately report this information to the ATO.”