Speaking to SMSF Adviser, SuperConcepts general manager of technical services and education Peter Burgess explained the events-based reporting regime was set up for monthly reporting, but SMSFs are only required to report on a quarterly or annual basis.
“As a result, there is a higher risk of SMSFs inadvertently breaching the cap or receiving unnecessary excess transfer balance determinations, which require action by advisers and administrators to address,” said Mr Burgess.
In order to overcome these issues, many SMSF service providers are making the decision that reporting events on a monthly basis is in the best interests of clients.
“I think it’s inevitable that service providers will go down that track,” he said.
“In situations where clients are commuting pensions and rolling them over to APRA funds, there is a high likelihood of incorrect determinations being issued by the ATO because the APRA fund has to report the commencement of the pension 10 days after the end of the month, whereas the SMSF may not have reported the commutation from their fund until a long time after that. So there is a high risk of their pension balance being double counted and an unnecessary excess balance determination being issued.”
Mr Burgess also pointed out that, in many cases, the administrator of the SMSF is not aware of balances that clients have in other funds, so they’re actually not in a position to determine whether an SMSF should be a quarterly or annual reporter.
“Many service providers have decided that aligning themselves with the monthly reporting for APRA funds is in the best interests of clients. A lot of the issues and confusion for SMSFs is coming about because the system itself is designed for monthly reporting,” he said.
More broadly, bodies like the SMSF Association have previously predicted that reporting will become more frequent and “real time” in the months and years to come for the SMSF sector.
“The bottom line is that SMSFs, from a technology point of view, are a long way behind the APRA funds. The rest of the superannuation sector as well as the regulators expect them to catch up. It just won’t be in one or two years. It might be in five or six years’ time,” said head of technical at the SMSF Association, Peter Hogan, late last year.
“The target is that perhaps 95 per cent of SMSFs within five years will actually have the technology to allow them to report on a genuine real-time basis. Whether that takes five years or 10 years, I don’t know. We’ll have to wait and see.”
we need a protector of the mum of dad SMSFs! complexity is ridiculous. the accountants and tax office will love real time reporting so they can watch our assets at all time, ready to tax and extract fees. I will never allow my SMSF to be administered by anyone other than myself!
Over Complicated ODwyers disaster of Pension caps, TBAR, etc needs to be unwound.
Simply allow what ever balance they have to be in pension, tax free income up to $100K pa and then tax the rest at 15%. Much simplier, same result and without all the rubbish extra admin and red tape that ODwyer has cost the system.
O’Dwyer, your arrogance and disaster implementation of the super changes because you did not consult industry first will be an ongoing red tape cost night mare unless it’s fixed.
And your pathetic attempt to fix the problems with the 3 year audit proposal is just wrong and will end up costing the SMSF industry more.