Speaking to SMSF Adviser, DBA Lawyers director Daniel Butler said providing an SMSF client with appropriate advice on the CGT relief requires a deep knowledge of tax, superannuation and actuarial calculations and the adviser must also be covered under an AFSL.
“Advisers are in a very difficult position because not everybody has that sort of skill set and this is a really complex area,” he said.
“Even for a very skilled, superannuation expert, it is highly complex work, and therefore advisers really should be making sure that they’re doing everything properly.”
This is further complicated by the fact that not all SMSF firms have adequate software that performs these sorts of calculations and stores relevant information about assets, he said.
“If you don’t have a computer system that does it for you, then you have to pull out of the cost base records and establish the cost base,” he said.
“Consider a tranche of shares, for example, there may have been corporate reconstructions, mergers, acquisitions, bonus issues, you could have had dividend reinvestment so it’s a hell of a lot of work to really get down into all the detail in order to establish the cost base, unless you’ve got a system that already has all of that work programmed into it.”
These advisers, he said, therefore have to go back and do substantial ground work to get source documents to be in a position to advise their client what their options are.
“So it’s going to cost the average client a few thousand dollars to get attention in this highly complex area, thanks to the complexity of this legislation,” he said.
“I don’t think the government envisaged how complex and how costly it would be to administer in practice, in fact, they probably thought they were doing a favour to the industry by providing a CGT reset. It is a welcome gift, we’re not saying we’re ungrateful but what we are ungrateful about is the complexities added to the system that should have been a lot simpler, to administer.”
Over Complicated ODwyer strikes yet again.
At almost every turn in these super changes is massive amounts of red tape bureaucratic minded overly complex rubbish that costs advisers and clients loads of money to sort out.
ODwyer, you are a disgrace and have made the super system so overly complicated it’s a disaster.
CGT Relief decision making should start with an analysis of the future performance of the portfolio. The tax consequences result from portfolio management advice, and hence, the need for an AFSL
I have a number of clients eligible for relief and so far, all have proceeded. Some of these are realising a $4m unrealised gain, so definitely worthwhile.
I agree with the article that it is a complex area that has required a lot of pre-work from us to ensure the clients work can be done efficiently.
Also agree with the comment in that CGT relief is not an ASFL requirement as it is a tax issue.
CGT relief is pointless. It’s an awful lot of work for very little benefit. And possibly no benefit in a lot of cases. I have 3 funds eligible for the relief. One a TRIS that has since converted to a ABP so no benefit. Another has one member in pension over 1.6M. The second member is likely to start a pension within a few years. Again no benefit. The third had a benefit but after discussions with their adviser, they decided the small benefit wasn’t worth the cost, effort and future complications. This particular fund had to roll back over $900K to accumulation to comply with the cap. If the benefit isn’t worth it for them, I can’t begin to imagine who it would benefit?
Why does an accountant need to be covered by an AFSL to provide CGT advice?