Quarterly Transfer Balance Cap Reporting – LAST CHANCE!

Author: Emma Partenza, Manager, TAG Financial Services

From 1 July 2023, reporting of debits and credits under a member’s transfer balance cap (TBC) is required on a quarterly basis – this is regardless of whether funds were previously classified as an annual or quarterly lodger for TBAR purposes.

Now that quarter 1 2024 has come to an end, we are days away from ensuring all reportable events are reported to the ATO that affect a member’s TBC.

What’s required to be reported by 28 October 2023?

All events in the 2022-23 financial year and all events that occurred in the July to September 2023 quarter must be reported by this deadline.

If no event occurred for the member in this period, then there is no requirement to lodge a transfer balance account report.

Greater importance on super fund transactions to be coded on a regular basis and having adequate data feeds in place to ensure appropriate transactions are reported is paramount. An accountants ongoing flexibility to re-classify transactions post a financial year end is going to be severely limited, as we will be locking in relevant transactions via these reports.

What will happen where the 2023 financial statements have not been finalised?

The ATO have advised where accounts cannot be updated on a quarterly basis, an estimate of the TBC event value is to be reported. This estimate can be amended in future when accurate information comes to light.

Considerations for Pension commencements & Benefit and recontribution strategies

Consideration must be given to the timing of commencing a pension for a member or the implementation of a strategy.

For example, commencing a pension late in the quarter (e.g. 25 September 2023) would mean that it’s required to be reported by 28 October 2023. Should there be flexibility in the commencement date, starting it on 1 October 2023 would provide additional time to prepare interim accounts, if required, and reporting of the event for the member.

Will a penalty be issued if an event is not reported quarterly?

It is unclear whether the ATO are now removing their educative approach that has been in place since the introduction of the transfer balance cap regime in 2017. To date, the ATO have not issued penalties for late lodgement of TBC events. Please note we could see a change in the ATO’s stance now the regime is streamlined.

The current penalty unit is $313 and a potential penalty for non-lodgement of a TBC event is a maximum of 5 penalty units – up to $1,565.

Next steps

    • Identify all pension commencements on 1 July 2023
      This is typically an easy commencement date as the fund has been fully re-valued. Can the actual value of the event be reported, are estimates required or should the pension commencement be delayed?
    • Lump sums from pension accounts?
      Do any members have a standing direction in place that instructs trustees to treat any withdrawals made over the required minimum pension in a particular way. It’s critical to review transactions for FY2023 in respect to these members to ascertain whether partial commutations are required (coded in your accounting systems and reported to the ATO).
    • Lodge all events by 28 October 2023!

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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).

Copyright 2023. Please do not reproduce without the expressed written consent of the author.