Reporting of transfer balance account information
The recent superannuation reforms
introduced the concept of a 'transfer balance
account', to basically record the value of member
balances moving into or out of 'retirement phase'.
In order to monitor these amounts, the ATO is introducing new reporting requirements and forms.
The ATO has released the new Transfer Balance Account Report (‘TBAR’), which is now available on ato.gov.au, and the ATO plans to have an online TBAR form available from 1 January 2018.
The TBAR is the approved form to provide data relating to transactions associated with the payment of retirement phase income streams to the ATO.
Reporting on events that affect a member’s transfer balance account is vital to minimising the taxation consequences if the transfer balance cap is exceeded.
While SMSFs will not be required to report anything until 1 July 2018, SMSFs can use the TBAR to report events that affect an individual member’s transfer balance account from 1 October 2017.
SMSFs with relatively straightforward affairs are likely to have only a few events per member to report over the life of the fund, including the commencing values of any retirement phase income streams to which an SMSF member is entitled (e.g., account based pensions, including reversionary income streams), and the value of any commutation of a retirement phase income stream by an SMSF member.
Binding Death Benefit Nomination ('BDBN') upheld
A recent decision by the Full Court of the South
Australian Supreme Court has provided guidance
about the operation of BDBNs.
Editor: Members of super funds may generally make a BDBN directing the trustee of the fund to pay out their superannuation benefits after their death in a particular way and/or to particular beneficiaries.
In this case, the member had executed a BDBN that nominated his legal personal representative (‘LPR’) as the beneficiary to receive his death benefits
Because he frequently lived outside Australia, he had also executed an enduring power of attorney (‘EPOA’) allowing his brother to be the sole director of the corporate trustee of his SMSF in his place.
Following his death, the executor of his estate (Dr Booth) brought an action for declarations that the trustee was bound by the BDBN.
Editor: Both the executor of a will and a person acting under an EPOA are 'LPRs' for superannuation purposes. The Full Court held that the BDBN was effective and that Dr Booth, as executor of the will, was the LPR for these purposes.
Although the brother was the LPR of the deceased during his lifetime, the EPOA was terminated upon his death
Reforms to stop companies avoiding employee entitlements
The Government will introduce new laws to stop
corporate misuse of the Australian Government’s
Fair Entitlements Guarantee (FEG) scheme.
The FEG scheme is an avenue of last resort that
assists employees when their employer’s business
fails and the employer has not made adequate
provision for employee entitlements, but it is clear
that some company directors are misusing the FEG
scheme to meet liabilities that can and should be
paid directly by the employer, rather than passed
on to Australian taxpayers.
The proposed changes will:
- Penalise company directors and other persons who engage in transactions which are directed at preventing, avoiding or reducing employer liability for employee entitlements;
- Ensure recovery of FEG from other entities in a corporate group where it would be just and equitable and where those other entities have utilised the human resources of the insolvent entity on other than arm’s length terms; and
- Strengthen the ability under the law to sanaction directors and company officers with a track record of insolvencies where FEG is repeatedly relied upon
These changes will be targeted to deter and punish
only those who have inappropriately relied on FEG,
and so should not affect the overwhelming majority
of companies who are doing the right thing.
Editor: The Government has separately released a ‘Comprehensive Package of Reforms to Address Illegal Phoenixing’, which will assist regulators to better target action against those who repeatedly misuse corporate structures and enable them to take stronger action against those entities and individuals.
These reforms will include (for example) the introduction of a Director Identification Number (DIN) (to identify all directors with a unique number), and making directors personally liable for GST liabilities as part of extended director penalty provisions.
ATO's occupation-specific guides
The ATO has developed occupation-specific guides to help taxpayers understand what they can and can't claim as work related expenses, including:
- car expenses;
- clothing expenses; and
- self-education or professional development expenses. The guides are available for the following occupations:
- construction worker;
- retail worker;
- office worker;
- Australian Defence Force;
- sales and marketing;
- nurse, midwife or carer;
- police officer;
- public servant;
- teacher; and
- truck driver.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.