Mr Smith says retrieving some of the data that needs to be collected real time to comply with the ATO’s plans for real-time reporting requirements could be difficult for certain types of assets.
“Real-time reporting is not as simple as people might think. For example, you might value a share every day, but you don’t value a piece of property every day, so some of these things are not as easy to deal with on a real-time basis,” he told SMSF Adviser.
“You might only be striking a valuation on some particular assets on an annual or semi-annual basis, so that in itself will be one of the limiting factors on how this can be taken.”
While a lot of data is already delivered on a real-time basis, asset valuation starts to become an issue when you implement a requirement for real-time member statements.
“Without having all of the assets valued appropriately, you could actually be providing misleading information on a real-time basis. [This is] dangerous and could be misleading,” Mr Smith said.
“So one has to be very careful about what data is actually being delivered on a real-time basis.”
However, Mr Smith said real-time reporting that reveals changes in pensions account balances and when people are making payments will be essential with the new regulations.
“So you can understand why the government wants to stay on top of that to ensure that things don’t go off the rails, but beyond those transactional things, it gets more difficult because of this valuation issue that will rear its ugly head at some point if people are not careful,” he said.
Mr Smith said he does not expect the requirements will have significant impacts on accounting firms but expects that administration platforms will need major changes.
“The admin platform providers will have to do all the hard yards and will have to amend their systems, to be able to deal with this stuff, and that’s always a challenge for them.”