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SMSF: Rollover benefit statement changes

Tags Retirement Planning
Category SMSF

Man looking for changes to SMSF process

If you’ve glanced at the financial section in the last 6 weeks you might have noticed there are even more changes in store for Self-Managed Super Funds (SMSFs). The latest being the launch of a new Rollover Benefits Statement (RBS) from July 1st 2013. So what does it all mean and more importantly; with new funds being set up at a rate of 3,000 a month over the past year, what should trustees look out for?

According to the Australian Taxation Office (ATO), from the start of fiscal 2014 all contributions received by a super fund during a financial year must be reported to the ATO by that fund – right down to where the contributions are transferred in a rollover. The new form also affects contributions information reported in the 2014 SMSF annual return (SAR).

Contributions received for a fund member in fiscal 2014 must be reported in the 2014 Member Contributions Statement (MCS), even if some of the contributions are rolled out to another fund before the end of the financial year.

The RBS will also no longer be used to provide contributions information to another fund with a rollover.

When to use an RBS

The ATO gives the following examples of when the receiving fund, must be given an RBS, proving such information isn’t already being provided electronically using the data standard:

  • During a contributions phase, if the member chooses to have all or part of their super interest rolled over to another fund.
  • When rolling over to another fund from which an income stream will be paid (such as moving from an accumulation phase in one fund to a pension phase in another).
  • When rolling over a lump sum after satisfying a condition of release.
  • When transferring benefits as part of contributions splitting or under family law.
  • Following a member’s death, when a pension reverts to a spouse.
  • When paying benefits to another super fund, as a non-complying fund trustee.

Payments not requiring an RBS include those involving only one trustee; when paying death benefits to a dependant directly to their own super fund; and when making a payment under a condition of release due to a terminal medical condition.

Tips for trustees

“SMSF members will have to ensure they receive a final exit statement from the original fund to ensure they know exactly what they have contributed that year and stay under the contribution cap limits,” said SMSF specialist adviser Liam Shorte of NextGen Wealth Solutions.

“It will be important for advisers to ensure they see that statement as well as the RBS before advising on contribution strategies.”

He added, “I don’t see any trouble with SMSFs reporting on contributions for members having rolled out of an SMSF, as this rarely happens while in accumulation phase, with most people exiting funds as they get much older or due to illness.”

More information on the new RBS is available via the ATO website. For SMSF trustees, it is another in a string of changes to check ahead of the new financial year, which we’ll keep you posted on.

If you have an SMSF set up, how do you manage it and what are your biggest challenges?

Important Information

Any tax related information in this article is of a general nature and is based on present taxation laws, rulings and their interpretation as at the date of this article. You should seek independent professional tax advice before making any decision based on this information.