The concessions that the ATO is currently looking at with the TBAR regime - including concessions for those well under the transfer balance cap and additional transitionary periods - could create significant administrative complexities for the SMSF sector.
You can read more about the latest proposed changes here.
Although well intended by the ATO, and in response to divided feedback, SuperConcepts head of technical services, Peter Burgess, said having various sets of rules will “no doubt” result in errors from clients and the tax office.
“I understand the ATO is trying to do everything they can accommodate the needs of the SMSF sector and I think they should be commended for that,” Mr Burgess told delegates at the SMSF Summit in Brisbane today.
“But I’ve got to say, what a shemozzle we are in when it comes to events-based reporting,” he said.
“Once we start carving out clients, it becomes complex and it leads to errors,” he said.
In the case of events-based reporting, pushing for exceptions that APRA funds don’t have will not necessarily work in the sector’s favour, said Mr Burgess, particularly given a post-reform environment where compliance with the new laws isn’t possible without up-to-date data.
Mr Burgess is supportive of an option put forward in an ATO position paper which starts with quarterly reporting, before diving straight into monthly reporting requirements. There are exceptions with this option, including compliance or non-compliance with a commutation authority that has been issued to an SMSF. This approach is in line with monthly reporting requirements for APRA funds.
“In my 20 years in the industry, there have been arguments that treating SMSFs differently is in the best interest of the client. But, I’m not sure this is one of those occasions,” Mr Burgess said.
“Clients will incur penalties for every day they exceed transfer balance. It is difficult to argue it is in their best interest to defer reporting of events which impact transfer balance cap,” he said.
“Given all the new thresholds and caps, our clients need up-to-date information,” he said.
The ATO’s assistant commissioner for superannuation, Kasey Macfarlane, said the ATO is intent on enforcing systems which give trustees the best chance at compliance with the new superannuation reforms, which is why there has had to be a considered push to the new reporting regime.
“But we realise this has been a significant shift for the sector. We know there are concerns about the administrative impact and cost, when compared to the benefits of more regular reporting,” she told delegates at the SMSF Summit.
“We are carefully considering that feedback, we are listening, and we do expect to make an announcement about our position in the coming weeks,” she said.
“We need to work out how to balance administrative ease and cost… and ensure that we can have transparency, and that SMSF trustees don’t end up with an unexpected tax bill under the new measures,” she said.