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Administrative Requirements For TBAR Due To The Law Change

Laws Change Starting On April 5, 2022.

On April 4, 2022, the Treasury Laws Amendment (Allowing Commutation of Certain Income Streams) Regulations 2022 became effective.

Changes made by the rules to the Tax Administration Act of 1997 and the Superannuation Industry (Supervision) Regulations of 1994 permit super funds to:

  • Retime some debit and credit occurrences in a member’s transfer balance account.

Commute excess transfer balance amounts for specific income streams in response to a Commissioner’s commutation authority (CCA).

  1. Who Is Affected By This Change?

    The following 3 transfer balance account occurrences are affected by this legal change:

    • Before July 1, 2017, a member received a capped defined benefit income stream, such as a market-linked pension or annuity, a life expectancy pension or annuity, or a lifetime pension or annuity (the original credit) (CDBIS).
    • This CDBIS was commutated by the member on or after July 1, 2017 (the debit).
    • The member started the affected product (a market-linked pension or annuity or a life expectancy pension or annuity) as a new pension or annuity (the new credit).

     

    Due to this legislation change, funds are needed to record any instances of these events or, in some cases, to correct already reported events.

    When Is A New Report Required From The Fund?

    We have identified three critical circumstances in which the fund will need to re-report:

    There Has Been No Mention Of The Commutation Or New Pension.

    Suppose you have not reported either the commutation (debit value) or the credit that arises when the member begins the new pension or annuity (the new credit). In that case, you must report the value of both the debit and the new credit at the beginning of the new pension or annuity, with a reported effective date of April 5, 2022.

    No Commutations Were Reported, But The New Pension Was Not.

    Suppose you previously reported the commutation debit value as zero and did not report the credit that arose when the member started the new pension or annuity. In that case, you must re-report the actual value of the debit and report the credit that arose when the member started the new pension or annuity, with a reported effective date of April 5, 2022.

    How To File A Report For An Occurrence That Happened On Or After April 5, 2022?

    If a member chooses to commute their pension and start a new affected pension, funds that hold any affected products may be obliged to record events in the future. Funds must comply with the standard transfer balance account reporting requirements if this happens.

    Contact KPG Taxation for more information.

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