SMSF trustees have until January 31 this year to get their LRBAs on commercial terms, a deadline which was extended from June 30 2016.
SuperConcepts executive manager, technical and strategic solutions Philip La Greca says the January deadline will be the first of the new year to catch trustees out, after superannuation reforms were implemented.
“Obviously the reforms are going to be a real big issue in terms of the way things happen throughout 2017. I think it’s literally going to start in January because the first thing we have is people trying to finish up cleaning up their related parties borrowing arrangements because that has a 31 January deadline,” Mr La Greca said.
“There’s a little hangover with that particular issue because the ATO has come out with their safe harbour guidelines so SMSFs have got the ability to meet those guidelines and the ability to catch up payments etc but they have to do so by January 31.”
While those guidelines emerged early in 2016, Mr La Greca said he suspects many SMSFs will only now be trying to catch up on their obligations.
“A lot of SMSFs wouldn’t have done anything for 2016 because the guidelines came out in late April 2016 so the chances people repairing or rectifying their arrangements between April and June was not on,” Mr La Greca said.
“Some wouldn’t have done anything because they didn’t know where anything was until fairly recently when they’ve got their 2016 financials finished so there will be a bit of pressure on to clean those up between now and then.”
While I am sure there will be issues that do arise from this change, it would be disappointing if it is “many” funds. There has been a 9-month lead in for this. If a fund’s accountant has not been able to pass on the importance of this change to the trustee during that 9 month period, then either the trustee needs a new accountant (because they are not fulfilling their role) or the trustee has not taken notice of the advice and probably should not be in that role. Where a trustee does not use an adviser, then if they fail to note the changes, again they should not be in that role. As an SMSF auditor, I have ensured that the accountants with whom I work were aware of the change over 6 months ago.