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Changes to SMSF 2017-18 annual return

There is a number of changes to the 2017-18 Self-managed super fund annual return (SAR) thanks to the super changes which came into effect on 1 July 2017.

Transition to retirement income stream (TRIS) account
The ATO has included a new label for the number of TRIS accounts an SMSF member has in accumulation phase.

A TRIS account is in accumulation phase unless the SMSF member has reached 65 years of age or has met another ‘nil’ cashing restriction condition of release (i.e., permanent incapacity, retirement or a terminal medical condition) and has advised their fund.

Limited recourse borrowing arrangements (LRBA)
New questions focused on the use of LRBAs and extra borrowings have been added to section H, items 15e and 16. SMSFs that hold assets under LRBAs will be required to complete these questions.

Correct calculation of a member’s total superannuation balance (TSB)
New labels to allow the make-up of the ‘closing account balance’ to be reported to support a more efficient calculation of a member’s TSB have been added.

The member’s TSB may affect their non-concessional contributions cap as well as other super caps from 30 June 2017.

Cessation of the temporary budget repair levy
Certain tax rates for superannuation entities have been reduced in line with the cessation of the temporary budget repair levy (payable by some individuals for 2014-15, 2015-16 and 2016-17).

These rates affected those individuals that applied to the taxable income of non-complying superannuation funds (47 per cent to 45 per cent) as well as the non-arm’s length component of the taxable income of a super fund (47 per cent to 45 per cent).

CGT relief
A new label has been added to the capital gains tax (CGT) schedule for the purpose of reporting deferred notional gains where the gain has been realised.

Early stage venture capital limited partnership tax offset
The ATO has added a new label to enable SMSFs to report the amount of unused early stage venture capital tax offset carried forward from the previous year.

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News

Ineligible downsizer contributions and how they are administered

August 12, 2019

When a downsizer contribution is ineligible, the fund must re-assess the amount in accordance with the Superannuation Industry (Supervision) Regulations 1994 and the trust deed. This is to determine if the amount can be retained as a non-concessional contribution.

Provided the trust deed allows so, the fund can return the contribution to the member or adjust the prior downsizing contributions to nil and report this amount as a non-concessional contribution when the member meets the age and work tests.

When a contribution can’t be returned or returned in full:
Members who no longer have a super interest with the fund, or an insufficient return amount, must have their contribution re-reported as non-concessional, even if the contribution was returned because the member did not meet the age/work tests. Some of the contribution may be an excess non-concessional contribution (ENCC). Regardless of the age of the member, if this is the case the member will receive an ENCC determination or when the fund can’t return the full amount. Members will continue to have access to all review rights under the ENCC scheme. Even if the member is in pension phase, the funds will still need to return an ineligible downsizer contribution if it cannot be accepted.

When a fund receives a release authority:
An amount released under these circumstances is treated as a super lump sum as it is a portion of the member’s super interest. Being in pension phase doesn’t prevent a fund from complying with the release authority although it may mean the full amount can’t be released, as the available balance may be lower than the amount stated in the release authority. Where the member’s available balance is lower than the release authority amount, the fund must release the maximum amount available.

The ATO monitors the rectification of this contribution reporting. Where funds don’t act within legislative timeframes, the Australian Prudential Regulation Authority (APRA) may be contacted.