The transfer balance cap (TBC) is the amount a superannuation member can transfer and hold in a retirement phase account. There is no cap on the amount of money that can be held in the accumulation phase.

From 1 July 2018, SMSF members with $1 million or more in superannuation, and who receive a pension from those assets, must report any TBC event to the ATO within 28 days of each quarter end. TBC events include starting a pension or commuting some or all of a pension.

The ATO had initially intended this change to come into effect from 1 July 2017, and would have applied this to all SMSFs.

Two groups representing the SMSF industry have welcomed the ATO's deferral and shift in terms.

"The reporting regime originally proposed ... would have imposed unnecessary and costly compliance pressure on all SMSFs," according to a statement issued by the Self-managed Independent Superannuation Funds Association.

The SMSF Association also welcomed the clarification from the ATO.

"This consultation shows that the ATO is willing to work with the industry to ease the implementation of event-based reporting," says SMSF Association CEO John Maroney.

This "carve-out" of SMSF members with balances of less than $1 million from event-based reporting of TBC events was recommended by both the SMSFA and SISFA. SMSF members meeting this criterion will continue reporting under the current rules of annual SMSF reporting.

"The association proposed, and the ATO agreed to, a $1 million superannuation balance threshold for individuals, reducing those receiving a pension and having to report by about 85 per cent," Maroney says.

"This large potential compliance burden has been reduced for SMSF trustees and their accountants and advisors. Hence, this will further help facilitate the successful implementation of the Transfer Balance Account Report."

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Glenn Freeman is a senior editor at Morningstar.

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