ATO encourages early reporting

The ATO has released updated guidance on what SMSFs are required to report and when those reports should be lodged, but has reminded funds that reporting new information earlier than scheduled deadlines was beneficial.

In the guidance released on its website, the regulator stated an SMSF must report events that affect a member’s transfer balance account (TBA).

Specifically, these events are when a member commences a retirement-phase income stream, the details of limited recourse borrowing arrangement payments where the payments increase the value of a member’s interest that supports a retirement-phase income stream, compliance with a commutation authority issued by the ATO and details of personal injury contributions.

The ATO highlighted the current transfer balance account report (TBAR) deadlines and the changes that will take place to them in 2023, but added: “Any SMSF can report events as they occur and are encouraged to because it helps members manage their TBA and avoid exceeding their personal transfer balance cap.”

Additionally, it stated early reporting “helps ensure our calculation of a member’s personal transfer balance cap is based on full and accurate information, in particular for events that occur in the income year prior to indexation, and avoids incorrect excess transfer balance determinations being issued”.

It also noted early reporting should take place, ideally at the time of the rollover, for the commutation of a pension that occurs when a member rolls over the pension to another fund.

“If an SMSF member rolls their super benefit into an Australian Prudential Regulation Authority (APRA)-regulated fund and starts an income stream there – and the SMSF does not report this to us in a TBAR when it happens – a double-counting of the member’s income streams will occur,” it said.

“This is because there will be a mismatch in timing of the reporting done by the APRA-regulated fund and the SMSF.

“If the member’s pension account is being rolled over because the SMSF is wound up, the TBAR should be lodged before the fund is wound up and the account reported as closed.”

Source: smsmagazine.com.au

Resigned directors offered relief from ID requirements

Former company directors, including those of corporate SMSF trustees, will not be required to obtain a director identification number (director ID) by 30 November if they have ceased all directorships before 1 December under a new draft legislative instrument released by the ATO.

The draft instrument, ABRS 2022/D1, issued on 15 November will exclude individuals who have resigned from all directorship roles during the period 4 April 2021 to 30 November 2022 from needing to apply for a director ID.

A draft explanatory statement (ES) accompanying the draft legislative instrument stated: “The instruments will relieve particular classes of persons from the obligation to obtain a director ID.

“To ensure that affected classes of persons benefit from this relief and do not become liable to any penalties for not applying for a director ID, the instrument for resigned directors and non-individual directors under the Corporations Act must take effect from 1 December 2022.”

The draft ES also noted the timing of the release of the instrument as being close to the deadline to apply for a director ID and said: “As a consequence of the timing of the registration of this instrument, it is necessary to give the instrument made under the Corporations Act retrospective commencement from 1 December 2022.”

The move has been welcomed by the SMSF Association (SMSFA), which stated it had “strongly advocated for this exclusion” and the removal of former and resigned directors from requirements to apply for a director ID did not undermine the intent of the policy.

The SMSFA noted the draft instrument does not permanently exclude an individual from the director ID regime.

“An individual who resigns before 1 December 2022, but later becomes a director again, will still need to obtain a director ID prior to any appointment as an eligible officer,” it said.

Accurium head of education Mark Ellem also welcomed the change and said: “Whilst a bit late in the game, it’s a welcomed measure to address this particular scenario of resigned directors who have no intention of ever holding office again.”

Smarter SMSF chief executive Aaron Dunn was also supportive of the shift, but noted the negative impact of the previous position on those who had to deal with it.

“It is pleasing to see this ‘common-sense’ approach by the [ATO] registrar to this issue, albeit far too late in the process when many people have fumbled their way through the process now unnecessarily,” Dunn said.

Written by Jason Spits
Source: smsmagazine.com.au