Research by Sharesight, a fintech platform based in Australia and New Zealand, has found a significant cost involved in terms of working hours when accountants are dealing with disparate data sources such as CSV spreadsheets, PDF statements and app screenshots.
Doug Morris, chief executive of Sharesight, said the proposed Division 296 tax “disproportionately” hits the SMSF sector at a time when auditors are already dealing with increasingly complex and global investment choices made by trustees.
“Trying to cope with complexity manually is very difficult at scale when you’re chasing dozens of dividend statements and contract notes for trades,” Morris said.
Morris noted the advantages to SMSF auditors of using financial technology go further than time savings, as the role is expected to become significantly more analytical and advisory in the future, especially given the proposed new super tax.
“Investor behaviour has evolved significantly over the last few years and a key attraction of having an SMSF is choice. SMSF trustees can embrace everything from Nasdaq stocks to private credit and even crypto assets,” he said.
“Going forward, exchange rates could be critical to whether a member’s balance is above or below $3 million on 30 June. Proactively managing that investment risk is easier when automated portfolio tracking is turned on.”
He continued that, as well as eliminating “shoebox syndrome”, the benefits available to SMSF auditors from technology include pulling dividend and trade data automatically from major brokers, identifying foreign currency impacts on investment performance, and providing clients a simple way to connect accounts and share data securely.
“Investment technology elevates the quality of service provided to the client in a way that spreadsheets can’t,” Morris said.
“Automated portfolio tracking unlocks the capacity to deliver higher-value services such as helping retirees enjoy their golden years, while also planning for tax-effective wealth transfer to the next generation. In the coming decade, SMSF auditors will win by being a trusted adviser rather than a tax administrator.”
According to its research, 65 per cent of premium Sharesight users trade via two or more brokers, and the average user holds 34 individual assets across three portfolios. With 75 per cent of accounting processes still being manual, this complexity presents challenges.
“At tax time, trustees are handing their accountants a wide-ranging portfolio of public and private assets, often in the messiest formats imaginable,” Morris said.
“One firm reported saving over 300 hours annually after switching to automated investment tracking. That’s a significant cost saving. Moreover, it’s error-free and live in real time, so it eliminates lost hours from rework.”
