Correcting an incorrect report
Where information submitted is identified as being incorrect, the original lodgment will need to be cancelled before a new one is lodged with the correct information.
To ensure the correction is processed sequentially by our systems, good practice is to send the cancellation request prior to lodging the corrected information.
While not mandatory, reporting the corrected transaction should be done subsequent to but on the same day as the cancellation where possible so that the member does not receive multiple assessments.
The instructions specific to the lodgment channel used by the provider contain further information on how to amend incorrect retirement phase events.
Example 8: reporting originally incorrect
John Field starts to receive a reversionary income stream on 31 July 2018. Fund A incorrectly reports this income stream as a super income stream (SIS) rather than as a reversionary income stream (IRS) and John receives a determination for excess transfer balance cap. John calls the fund and the fund lodges a cancellation of the original transaction and reports a new IRS event for John.
End of example
Example 9: reporting correction due to change in unit pricing
Patrick Swenson is receiving a transition to retirement income stream in accumulation phase but turns 65. His fund now reports a super income stream for him (SIS) using the value on the date he turned 65 based on the last available unit price. After lodging this report, a 'tax-free unit price' is determined for the date he turned 65, which is different to the unit price used for the previous valuation. The fund cancels the previous SIS report and re-reports using the updated unit price.
End of exampleFor information on amendments, see Amending transactions, balances and events.
Incorrect reporting due to a change in the law
Where the law affecting the transfer balance cap is changed, funds may need to re-report in order to comply with the updated legislation. The same processes listed under Correcting an incorrect report should be followed.
Example 10: correctly reporting the commencement of a market linked pension after 1 July 2017
On 1 July 2018, Leanne purchased a market linked pension (new credit) valued at $2.1 m directly from the underlying account balance lump sum from the commutation of their CDBIS market linked pension (the debit). As her new market-linked pension commenced after 1 July 2017, it is no longer a CDBIS for transfer balance cap purposes.
The original credit for the CDBIS market linked pension was valued on 1 July 2017 at $2.4 million. There was no transfer balance excess as it was a CDBIS.
New regulations affecting the calculation of Leanne's pension were registered in April 2022.
Under the regulations, the debit and credit for the commutation of the original CDBIS and the commencement of the new pension should be reported in Leanne's transfer balance account with an effective date of 5 April 2022, when the regulation commenced. This will ensure excess transfer balance amounts are treated correctly.
A value of $2.1 million is attributed to the commutation of the old CDBIS (the original debit), being the original credit value less the total pension payments made before the commutation of the old product since 1 July 2017. The underlying account balance of the lump sum when the old CDBIS was commuted was $1.8 million (the new credit).
Leanne will receive a determination of her excess transfer balance amount which will include the excess and the associated earnings that accrue from 5 April 2022. There will be no transfer balance credits for deemed earnings between 1 July 2018 to 5 April 2022.
Unless Leanne chooses to commute the excess amount from another account based pension (if available), the fund must wait until it receives the Commissioner's Commutation Authority before it can commute any excess amounts from the new market-linked pension.
End of exampleVariations of Example 10 based on previous reporting
As the regulations registered in April 2022 can affect transactions as far back as 2017, funds may find themselves in different reporting situations:
- If you have not reported either the commutation (debit value) or the credit that arose when the member commenced, the new pension or annuity, then you will need to report the value of both the debit (commutation) and the credit on commencement of the new pension or annuity, with a reported effective date of 5 April 2022.
- If you have reported the commutation debit value as nil and not reported the credit that arose when the member commenced the new pension or annuity, then you will need to re-report the actual value of the debit (commutation) and report the credit on commencement of the new pension or annuity, both with a reported effective date of 5 April 2022.
- If you have reported the commutation debit value as nil and reported the credit that arose when the member commenced, the new pension or annuity, then you will need to re-report both the actual value of the commutation debit and the credit on commencement of the new pension or annuity, with a reported effective date of 5 April 2022.