Monthly TBAR reporting ‘inevitable’ as clashes crop up
Greater numbers of SMSF service providers are expected to make the move to monthly events-based reporting, with a clash in reporting timeframes between SMSFs and APRA funds leading to confusion and double counting issues.
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.”