Commutation authorities are issued by the ATO when a member of a SMSF has exceeded their transfer balance cap. A commutation authority will be issued after the member has received an excess transfer balance determination alerting them they have passed the cap. The transfer balance cap is currently $1.6 million and is applied to the combined total of all superannuation accounts held by an individual. To receive a commutation authority, a SMSF member has either; Not commuted the excess amount in the determination in full by the due date, or; Has made an election for the ATO to send a commutation authority to their fund to have the excess amount commuted. After receiving a commutation authority, individuals must then; Pay a superannuation lump sum by way of commutation. The commutation authority will detail the amount that must be commuted from a specified income stream for that SMSF member. Or; Choose not to comply with the commutation authority because the member is deceased or the ATO issued in relation to an income stream that is a capped defined benefit income stream. Send the ATO a transfer balance account report (TBAR) stating the details of the commutation or why you have chosen … Continue reading Commutation authorities for SMSFs