The guidelines in the LRBA payments section of the TBAR form is confusing and likely to lead to incorrect credits being reported, says an industry lawyer.
Speaking in a webinar, DBA Lawyers director Daniel Butler said the legislation that was introduced earlier this year in relation to LRBAs, made it clear that a credit only needs to be reported for an LRBA payment where the LRBA was entered into after 1 July 2017, and where the loan repayment shifts value from the accumulation account to the member’s pension account.
“So therefore the law is that you only get a credit in respect of an LRBA in this instance. A lot of LRBAs are [excluded from it]. A lot of LRBAs entered into before 1 July just won’t even get a credit,” said Mr Butler.
“However, if you go to the TBAR form, the TBAR form specifies that for an LRBA, to report all of your repayments. It simply says report all your repayments, and if you go to the guide, the guidance note for the TBAR form, similarly there is no qualification about this.”
Mr Butler said he suspects that a lot of people with LRBAs will report credits for payments when the law would actually carve them out of this reporting.
“So don't fall into that trap. While the ATO did consult on [the TBAR] form, this did not get picked up,” he said.
“If you've got an LRBA, the law is that you don't have to report on this form if your LRBA was entered into pre 1 July 2017, even though [the form] suggests you do. In any event, if your LRBA was after 30 June, you only have to report where there's this value shift from accumulation to pension.”
“The TBAR form is at this stage, in my view, misleading. It needs to be rectified ASAP.”
By Miranda Brownlee
29 November 2017