TBAR: Minimum pension payments not met

Overview

If the minimum pension payments are not met during the financial year, the member's pension account will need to be commuted.

This article looks at how to commute the pension and ensure the TBAR event is reported correctly.

Instructions for Simple Fund 360

Complete the following steps to commute the pension account and ensure that the commutation event is reported correctly for TBAR purposes:

1. Determine the member's pension account balance at year-end. This is done by taking note of the member's pension balance after the year-end create entries process.

For example, the member balances as at 30/06/2019 is as follows: 

If adjustments need to be made to the profit/loss or tax allocation, refer to the Member Allocation Worksheet. 

2. Reverse entries to the start of the period under Period Compliance.

Re-opening the period may be required if the minimum pension payments were not met in the previous financial year.  

3. Commute the member's pension account on 1 July of that income year. This will convert the member's account from pension phase to accumulation phase as the member is no longer entitled to claim ECPI for that particular financial year. 
In this example, commuting the pension account on 01/07/2018

4. Edit the TBAR event in the Transfer Balance Dashboard to have a debit amount of the amount noted in step 1, and change the date for the TBAR event to the end of the financial year (30/06/20XX)

For example, editing the TBAR Event to 30/06/2019, with the debit balance being: $1,593,431.25

5. Recreating entries can be done if required.

References

Law Companion Ruling LCR 2016/9 (para. 55)

SMSFs: Minimum pension payment requirements – frequently asked questions