Audit firm reports ‘tsunami’ of CGT errors
The application of the CGT transitional rules has been “chaotic” according to one audit firm, with over half of all affected 2016/17 returns containing errors.
Hayes Knight director of superannuation services Ray Itaoui said the recent superannuation reforms have been the “catalyst for a tsunami of SMSF accounting errors”.
Mr Itaoui who runs Hayes Knight’s SMSF audit outsourcing business Superssentials, said across the audits received for the 2016/17 financial year so far, there have been errors in around 70 per cent, which all relate to the incorrect implementation of the CGT transitional rules.
Some of the key areas where errors are being made he said are around ineligible funds applying for CGT relief and with the implementation of the cost base reset.
In some cases the wrong date has been used because of a misunderstanding about the trigger events and timing of CGT relief, he explained.
There have also been errors made with deferred capital gain amounts with the deferral amounts often calculated incorrectly, he said.
“We will not sign off any audit that has incorrectly implemented CGT transitional relief,” said Mr Itaoui.
“SMSF auditors need to be meticulous when auditing funds where CGT transitional relief has been
applied as inevitably errors are being made.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.