Welcome to BDO’s latest Superannuation Quarterly Update, where we provide the latest news and insights from the ever-changing superannuation and self-managed superannuation fund (SMSF) landscape in Australia. Keeping up to date with the latest developments and requirements is crucial to fulfilling your obligations and optimising your superannuation benefits.
This update includes important announcements from the Australian Taxation Office (ATO), the lodgement of Transfer Balance Account Reports, upcoming lodgement dates and a Q&A with BDO’s National Superannuation Manager, Lisa Philip.
What is the Regulator Saying?
The minimum drawdown rates for super income streams have now changed
In response to the COVID-19 pandemic, the Federal Government temporarily reduced superannuation minimum drawdown requirements for account-based pensions by 50 per cent for the years ending 30 June 2020, 2021, 2022 and 2023.
From 1 July 2023, this 50 per cent reduction in the minimum pension drawdown rate no longer applies, and the minimum pension factor will return to standard payment rates.
As such, the minimum pension withdrawal rates from 1 July 2023 are:
Age at 1 July
65 – 74
75 – 79
80 – 84
85 – 89
90 – 94
95 and over
Keep this in mind when considering the cash flow of your SMSF for the coming year.
Indexation of transfer balance caps
Did you know that the transfer balance cap was indexed on 1 July 2023?
On 1 July 2023, the general transfer balance cap (TBC) received an upward adjustment. An individual’s transfer balance cap is the amount that can be transferred into tax-free retirement phase income streams, encompassing most pensions and annuities.
As a result of this adjustment, individuals will now have a personal transfer balance cap between $1.6 and $1.9 million based on the highest balance of their transfer balance account between 1 July 2017 and 30 June 2023.
To verify your personal transfer balance cap, you can access this information through ATO online services on myGov. Alternatively, contact your adviser, as they will have access to this number in the ATO online services for tax agents.
Valuing SMSF assets for your annual return
The ATO has reminded trustees that all SMSF assets must be valued at market value as part of preparing the fund's accounts, statements and SMSF annual return (SAR) each financial year.
The market value is calculated as at 30 June and is the amount an unrelated party could be reasonably expected to pay if the asset was for sale.
Remember to get your valuations done before going to your accountant and auditor. Providing relevant evidence of these valuations in a timely manner is crucial to ensuring the prompt completion of your audit and the timely lodgement of your SAR.
Did You Know?
Did you know that all self-managed super funds are now required to lodge their transfer balance account reports on a quarterly basis?
What is a transfer balance account report?
A transfer balance account report, (or TBAR), is a form that superannuation funds must lodge with the ATO about any events that affect a member's transfer balance account. Any SMSFs with a member who is receiving an income stream are required to lodge a TBAR when certain events occur.
What transfer balance events are reported in a TBAR?
A TBAR must be lodged when:
- A retirement phase super income stream commences
- Lump sum withdrawals are made from a retirement phase income stream
- The balance from a retirement phase income stream is transferred back into an accumulation account (rollback)
- A retirement phase income stream is transferred to another superannuation provider
- The minimum pension is not withdrawn in a financial year
- A death benefit income stream commences
- A retirement phase income stream is commuted voluntarily (such as part of a family court order)
- An Excess Transfer Balance Determination is issued by the ATO.
Note: You do not need to lodge a TBAR if no event occurs, or if your SMSF only paid pension payments during the period.
When are TBARs due to be lodged?
From 1 July 2023, all SMSFs are required to report the above events by lodging a TBAR quarterly. All unreported events that occur before 30 September 2023 must be reported to the ATO by 28 October 2023.
What is the impact of this change on SMSF trustees?
This change has increased the administrative burden for trustees, demanding more diligence in tracking and reporting pension-related events. It is crucial for trustees to work closely with their administrators and accountants to ensure they meet these reporting deadlines, to avoid penalties and maintain compliance.
If you are aware that your fund has maintained a transfer balance account (see above) in your fund since 1 July 2023, and you will need to lodge a TBAR before 28 October, please contact your BDO adviser for assistance.
Q & A
Lisa Philip, National Manager, Superannuation
This month, BDO’s National Leader, Superannuation, Paul Rafton, sits down with our National Superannuation Manager, Lisa Philip, for a Q&A.
Before joining BDO’s National SMSF team in January 2022, Lisa was a member of the BDO Perth superannuation team for 14 years. Lisa lives in Perth with her husband and three young children, and most of her working day is focused on assisting the national team, as well as assisting the SMSF partners in Adelaide and Brisbane.
Lisa, what attracted you to the national role in BDO’s SMSF team?
A couple of things attracted me to this role. Firstly, BDO has a well-established and respected presence in the SMSF industry, and I couldn’t turn down the opportunity to work with and learn from our key SMSF leaders on a regular basis. I was excited about the prospect of working on challenging projects and broadening my knowledge. This role also offered the chance to make a meaningful impact on BDO’s SMSF service offering at a national level, and that’s important to me.
Secondly, BDO has a very strong culture of collaboration and teamwork, and this was another significant factor that influenced my decision. Being part of the national super team means working closely with my talented colleagues from many different states and backgrounds. This collaborative approach fosters knowledge sharing, innovative problem-solving, and the ability to tap into a diverse pool of skills and experiences.
Finally, I won’t hide the fact that the ability to perform my role solely from my home office was a big drawcard. I work on Eastern Standard Time, meaning that my day finishes at school pick-up time here in WA. This role allows me the best of both worlds – a challenging, supportive work environment, as well as the ability to be there for my family. It has been a game changer for my family’s work-life balance, and I feel very grateful to be given this opportunity.
Lisa, what can trustees do to help contain the administration costs for their SMSF?
This is an excellent question. As we all know, managing an SMSF comes with several administrative responsibilities and costs. To assist in keeping the costs down, trustees of an SMSF can focus on the following:
- Maintain compliance - Firstly, ensure that you comply with the superannuation rules and regulations when managing your SMSF. Non-compliance with the rules can lead to penalties, and additional administrative costs. Stay informed and ask your SMSF adviser if you need assistance. Remember that it will cost less to ask the question than it will to fix a problem.
- Stay organised and proactive - Being organised and proactive in managing the SMSF affairs can prevent costly mistakes and delays. Keeping all documentation up-to-date and readily accessible makes a difference when it comes time to prepare your annual compliance work.
- Education - Educate all members of the SMSF about the fund's objectives, investment strategy, and administrative processes. Encouraging members to be financially informed and responsible can reduce the likelihood of errors and misunderstandings. The ATO has some excellent educational material about managing your SMSF.
- Embrace technology – When given the opportunity, we encourage our clients to embrace technology. There are several digital platforms that allow automation of processes that previously needed to be performed manually. A great example is a bank data feed. A bank data feed provides our SMSF platform with a list of daily transactions directly from your bank. When I started my career, these transactions all needed to be keyed in manually. The data feeds help reduce the need for extensive manual data entry, ultimately saving time and effort, and regularly reconciling financial transactions and statements allow us to ensure accuracy and identify any discrepancies early on. This prevents costly errors and makes the audit process smoother.
Finally, remember that while cost containment is essential, trustees should always prioritise compliance, accuracy, and the best interests of the SMSF members. Ask your BDO adviser for help when you need it, and this will assist in making informed decisions that benefit the fund and its members in the long run, as well as keeping costs down.
What are some of the most common mistakes you see trustees making when it comes to managing their SMSF?
As an SMSF accountant, the most common mistake I see is Trustees mixing their personal and SMSF assets. The superannuation legislation clearly states that Trustees should be making a clear separation between their personal assets and those of the SMSF, but we regularly see Trustees using their personal money to pay for SMSF expenses, and vice versa. This can have compliance consequences and could result in a qualified audit report, so it is important to ensure that you are using the correct bank account when paying SMSF expenses.
Another common mistake I see is inadequate record-keeping by the Trustees. Proper record keeping is essential for SMSF compliance, and Trustees must maintain accurate records of financial transactions, decisions, and all supporting documentation. This is especially important when it comes to any unlisted or unusual investments you are making. We can easily find information in relation to listed shares and trusts, and managed funds. However, it’s often very hard to find information on unlisted companies, so if you are investing in this kind of asset, it’s essential to ensure you are saving all purchase and sale documentation and receiving regular updates from the company. As we discussed, if you don’t do this, your administration costs may be increased, as the accountants and auditors need to spend additional time obtaining the supporting information.
Superannuation Key Lodgement Dates
Payment of super guarantee contributions.
28 days after each quarter ends e.g. SG contributions for the June 2023 quarter must be paid by 28 July 2023.
Lodgement of tax returns for newly established SMSFs.
28 February 2024 (payment is also due on this date).
Lodgement of tax returns for SMSFs with income in excess of $2 million in the last income year lodged.
31 March 2024 (payment is also due on this date).
Lodgement of all other SMSFs.
15 May 2024 (payment is also due on this date).
Transfer Balance Account Reports (TBAR).
All SMSFs are now required to lodge TBARs on a quarterly basis, regardless of the member’s Total Super Balance (see above).
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