‘Embrace technology to cut SMSF red tape’

Addressing the SMSF Association’s 2021 SMSF National Conference, deputy CEO and director of policy and education Peter Burgess said that implementing electronic measures should assist improve efficiencies in the SMSF sector and, consequently, further reduce fees.

“We believe it would be a backward step if proposals adopted as part of the COVID relief packages and those outlined in a recent government consultation paper were not made a permanent part of the SMSF landscape,” Mr Burgess said.

“Reducing red tape and complexity is a central theme of our 2021–22 federal budget submission and supporting this government initiative is an important element of it.”

Mr Burgess said the broader SMSF industry and SMSF trustee establishment and ongoing financial reporting processes contain a significant number of signatures, resolutions and record keeping that could benefit from the efficiencies inherent in these proposed measures.

The consultation paper aims to identify business communications that will benefit from technology neutrality changes, particularly those that lower compliance costs. It identifies super as one area for improvement, noting that much of the legislation is exempted from the Electronic Transactions Act 1999 that allows information to be recorded or retained in electronic form.

Mr Burgess noted the government is proposing to remove these exemptions so that records can be stored by any means as long as the information is readily accessible, in a format that can be easily reused and where the integrity of the information can be maintained.

“The super legislation is littered with clauses that require physical documents to be stored. For example, SMSF trustees are required to retain physical written records of decisions made about the storage of collectables such as artwork, antiques, jewelry and similar items and to retain these records for 10 years,” Mr Burgess said.

“SMSF trustees are also required to prepare a written rectification plan in situations where the fund breaches the 5 per cent in-house asset rules. New trustees are also required to sign a trustee declaration to declare they understand their obligations and responsibilities.

“Completed declarations must be kept not only for the life of an SMSF, but for at least 10 years after it is wound up.

“It is obviously important that adequate and reasonable protections are in place so that individuals are not at risk of poorly or illegally executed corporate documents. But the association firmly believes a balance can be struck between securing the integrity of the SMSF sector and using appropriate electronic measures to lower costs.”