90% increase in SMSF accumulation assets post Transfer Balance Cap

The Transfer Balance Cap has seen a dramatic change in the tax status of SMSF assets, Class Ltd has found.

The introduction of the Transfer Balance Cap – which limits the amount that can be held in pension/retirement phase – has been followed by an almost doubling in accumulation phase assets. Almost 25% of SMSF assets in pension phase have lost that tax-free status.

$200 billion increase in SMSF accumulation phase assets

According to the Class figures – in the June 2018 SMSF Benchmark Report – SMSFs held $222 billion worth of assets in accumulation phase in March 2017, . By 30 June 2018 this figure was $422 billion, a 90% increase. The Transfer Balance Cap applies from 1 July 2017. Read more...

ATO to send Excess Transfer Balance Cap determinations in January

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. Read more...

Transfer Balance Cap transition deadline looms for SMSFs

SMSFs impacted by the Transfer Balance Cap are being urged, by the SMSF Association, to seek advice before the transitional deadline of 31 December 2017.

One of the 2016 Budget measures, the Transfer Balance Cap commenced on 1 July 2017. It limits the amount that can be held in pension phase, requiring amounts over the 1.6 million cap to be removed from the retirement phase or else imposes a tax penalty. There is a transitional rule, which ends on 31 December, allowing a grace period of 6 months for Transfer Balances of $1.6 million to $1.7 million. Super funds with Transfer Balance amounts over $1.6 million will start accruing excess transfer balance tax from 1 January 2018. Read more...

SMSFs need to rethink estate planning in light of Transfer Balance Cap

Many SMSFs and their advisers are “blissfully ignorant” of the implications of the Transfer Balance Cap upon death, and need to rethink their estate planning, says the SMSF Association.

SMSF Association Head of Technical Peter Hogan said that SMSF members should seek specialist advice on the potential impact of receiving a pension on the death of their spouse. He said that assets supporting such a pension are counted towards the surviving spouse’s Transfer Balance Cap, current set at $1.6 million. Read more...

Changes to SMSF LRBAs top BT Advice list of queries

Changes to SMSF Limited Recourse Borrowing Arrangements (LRBAs) has topped the list of adviser queries for the June quarter, according to BT.

Changes were made to include LRBAs in the calculation of the Transfer Balance Cap, with further legislation expected later in 2017 to include LRBAs in the calculation of the Total Superannuation Balance.

BT Technical Consultant, Tim Howard, said the changes to LRBAs were easily the most topical query from advisers for the June quarter.

Mr Howard said the measures had broadly been introduced to prevent people from transferring funds from accumulation to retirement phases using a loan repayment, potentially circumventing the Transfer Balance Cap. Read more...

ATO issues Transfer Balance Cap & super death benefits guidance: LCG 2017/3

The ATO has issued finalised guidance on how the Transfer Balance Cap works with superannuation death benefits.

The ATO has issued LCG 2017/3 – Superannuation reform: Superannuation death benefits and the transfer balance cap, a draft of which was issued as LCG 2017/D3.

LCG 2017/3 (a Law Companion Guideline, which is a type of ATO public ruling) focuses on how the Transfer Balance Cap works with reversionary and non-reversionary death benefit income streams.

“Where no superannuation income stream is cashed and a superannuation death benefit is paid out of the superannuation system as a superannuation lump sum, a transfer balance credit does not arise in the recipient’s transfer balance account,” says the ATO in LCG 2017/3. Read more...

Transfer Balance Cap commutation amount can be worked out later: PCG 2017/5

Commutations so that members are under the $1.6 million Transfer Balance Cap can be for an amount to be worked out later, according to the ATO.

The ATO says it will not apply compliance resources to the review of certain commutations made before 1 July 2017 that aim for a member to be under the Transfer Balance Cap, though with a number of conditions. This is contained in a Practical Compliance Guideline (PCG), which sets out how the ATO will administer the tax rules, PCG 2017/5: Superannuation reform: commutation requests made before 1 July 2017 to avoid exceeding the $1.6 million transfer balance cap. Read more...

ATO finalises Transfer Balance Cap & TRIS transitional CGT guidelines

The ATO has finalised, previously draft, guidance on how the transitional CGT relief for superannuation funds works for the Transfer Balance Cap and Transition to Retirement Income Streams.

LCG 2016/8 Superannuation reform: transfer balance cap and transition-to-retirement reforms: transitional CGT relief for superannuation funds, previously LCG 2016/D8, has been finalised.

Update: The ATO has also finalised LCG 2016/9: Superannuation reform: transfer balance cap.

The Law Companion Guideline, which is an ATO Public Ruling, “provides guidance on the transitional CGT relief available for superannuation funds because of the transfer balance cap and transition-to-retirement reforms commencing on 1 July 2017”. Read more...

ATO issues more draft guidance on Transfer Balance Cap issues

The ATO has issued more draft guidance on the operation of the Transfer Balance Cap and related issues, coming from the changes to superannuation in the ‘fair and sustainable’ reform package.

ATO consults on Transfer Balance Cap, transitional CGT relief guidelines

Updates:

The ATO has issued LCG 2017/D1: Superannuation reform: defined benefit income streams – pensions or annuities paid from non-commutable, life expectancy or market-linked products – a draft Law Companion Guide (LCG). A LCG is a type of public ruling, which sets out the ATO’s view on how a recently enacted law applies. Read more...

ATO consults on Transfer Balance Cap, transitional CGT relief guidelines

The ATO is consulting publicly on two Law Companion Guidelines for recent changes to superannuation – the Transfer Balance Cap and transitional CGT relief for superannuation funds around the Transfer Balance Cap and the changes to the income tax exemption for assets held by super funds relating to a Transition to Retirement Income Streams (TRIS).

Updates:

The ATO has issued two draft Law Companion Guidelines, for consultation:

A Law Companion Guideline (LCG) is a type of public ruling, which sets out the ATO’s view on how a recently enacted law applies. The Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 recently passed the Parliament, and is waiting assent. Read more...