In late June this year, the ATO announced that from 1 July 2023, transfer balance account reporting (TBAR) for SMSFs will be streamlined, with all SMSFs being required to report an event 28 days after the end of the quarter in which an event occurred. This followed a consultation with the industry initiated in November last year.
Speaking on a recent podcast, ATO client engagement director Dalila Vellotti confirmed that while all SMSFs will be moving to quarterly-based reporting from 1 July next year, the ATO doesn’t intend to further reduce the reporting timeframes for TBAR.
- We’ve listened to the feedback from the consultation earlier this year and most funds, advisers, and the community did not want more frequent reporting.
- So, at this stage, there's no intention to move to more frequent reporting such as monthly.
Ms Vellotti said the consultation indicated that the SMSF industry generally supported moving to a quarterly-based reporting framework with delayed reporting causing a range of issues.
- Where the transfer balance account report was lodged with the SMSF annual return, in some instances there was a delay of up to 18 months in the reporting.
- These delays were leading to poor experiences for clients and reverse workflows.
- Some clients were in excess of the transfer balance cap and incurring additional tax and were unaware of this until the event was reported to the ATO. That was on of the big challenges and one of the reasons leading us to reconsider the annual concession.
Speaking in the same podcast, Smarter SMSF chief executive Aaron Dunn said SMSF firms and professionals are generally now in a much better position to handle quarterly-based reporting compared to when transfer balance account reporting first came in back in 2017.
- There is now a much larger cohort of tax practitioners and therefore SMSFs that have real-time reporting available to them through software.
- We know that there are around north of 450,000 funds now using cloud-based SMSF-specific software. So the industry is now much better equipped now to be able to handle this because of the advancements that we've seen in technology in the sector as well.