End of financial year posing ‘real danger’ for SMSF trustees
With a large number of accounting firms either unlicensed or new to licensing, there is a significant risk that many SMSF trustees could be caught out by the new super rules and left facing large penalties, cautions one financial services firm.
Speaking to SMSF Adviser, Merit Wealth accountants services director David Moss said almost every client with an SMSF will need a conversation from either an accountant or financial planner.
Mr Moss said financial planners have historically had regular conversations with their clients and while many accountants do as well, this can depend on whether they have the time to have these discussions with clients and whether they are licensed.
“If the client just posts their tax and accounting work then the accountant might not actually have the time or the opportunity to sit down and go through this stuff with the client,” said Mr Moss.
“There is a real danger for 30 June 2017, because if there is a client out there who gets caught out by these rules and no one helps them; no one makes them aware of the issues, they could find themselves in a really messy situation.”
If an SMSF trustee has $2 million in super and they’re in pension mode at the moment and don’t do anything until they get halfway through 2017, then they could be looking at a large sum of penalty tax for not having fixed that up, said Mr Moss.
While most SMSF trustees would have initially received advice on setting their pension up in the first place, it might have been 10 years ago when the accountants exemption still applied, said Mr Moss.
Allens partner Michelle Levy said failing to flag the recent superannuation changes with clients could also place accounting firms at risk of legal action further down the track if the client is adversely affected.
This means firms will need to ensure they either advise clients on the recent changes, she said, or if they’re unlicensed, refer them to a firm that can.
“So if an accountant failed to tell their client that they had a window in which to do something based on the recent [superannuation legislation], there would be a good argument that they were negligent,” she warned.
“For example, there is currently an opportunity for the client to potentially put more into super before the new caps are introduced.”