Even the Australian Taxation Office is having trouble coping with the complexity introduced into the superannuation system by policy changes over the past year. The ATO has reported that in certain circumstances its system is duplicating amounts in calculating an individual’s total superannuation balance.
The ATO says the error is caused by its systems being unable to match member contribution statements and transfer balance account reports.
Transfer balance account reporting was introduced as part of the transfer balance cap rules. All superannuation providers, including SMSFs, are required to report data relating to transactions associated with the payment of retirement phase income streams on an event basis.
Common events include: income streams a member was receiving just before July 1, 2017 continued to be paid on or after July 1 and which are in the retirement phase; new retirement phase income streams; and commutations of retirement phase income streams.
Currently, transfer balance account reports and member contribution statements are matched using the fund ABN/TFN, the member account number and a member client identifier.
“Where this matching is unsuccessful the system identifies these forms as being for separate accounts and consumes a value for both forms. This results in an overestimated member TSB,” the ATO says.
The ATO has come up with system changes that should mitigate the need for new reports to be filed for an estimated 183,000 accounts. It has asked funds to make sure their MCS and TBAR identifiers are aligned.
Additional reporting requirements will apply where a member has more than one super account and, therefore, more than one MCS.
Funds with member contribution statements and transfer balance account reports that do not align with the proposed new matching data will be required to undertake additional reporting.
Calculating a member’s TSB is an important part of the system. From September, TSB amounts will be used to work out eligibility for a number of things: the unused concessional contribution cap carry-forward; the non-concessional contributions cap and two or three-year bring-forward period; the government co-contribution; and the tax offset for spouse contributions.
For self-managed funds, TSB amounts will also determine whether the fund can use the segregated assets method to calculate exempt current pension income.
TSB includes the accumulation phase value of superannuation interests, any super income stream in the retirement phase (transfer balance), and the amount of any rollover superannuation benefit not already reflected in the accumulation phase or transfer balance.
The ATO says it will contact affected funds next month.