Speaking to Accountants Daily, Verante Financial Planning director and SMSF Association chair for NSW Liam Shorte said he works with accountants on a daily basis, revealing certain habits that may be detrimental when the new reporting regime kicks in.
Last week, the ATO announced that from 1 July 2018, SMSFs that have members with total superannuation account balances of $1 million or more will be required to report events impacting members’ transfer balances within 28 days after the end of the quarter in which the event occurs.
Mr Shorte said, in his experience, accountants needed to be more proactive moving forward to avoid habits such as leaving paperwork to the last minute and backdating documents to meet deadlines, potentially catching them out under the new regime.
“They may have conversations with clients over the phone about setting up pension during the year but the paperwork is left to the end of the year to do and it’s just not going to be good practice going forward with the new reporting regime,” said Mr Shorte.
“Accountants and financial planners need to get into the habit of catching up with their trustees at least once every quarter for the reporting and possibly more if their clients are taking ad hoc payments from their super funds because they’ll have to report for funds over $1 million moving forward from 1 July 2018.
“I think it’s just a case of bringing things up to meet the new standards and getting rid of old practices and adapting to the new world.”
Added Value Consulting founder Thea Foster sees an opportunity for accountants in the changes, believing it provides more opportunity for face-to-face catch-ups as the “trusted adviser”.
“It’s down to the accountant to establish a relationship for advice,” said Ms Foster.
“If you don’t keep in touch with your client from time to time and certainly more than once a year, [then you risk them approaching others for advice].”
People have SMSFs because they want to be self directed. Typically they don’t want financial advice, whether that’s a good or bad idea, its not for me to say. As long as the law lets you have a SMSF, we are stuck with people who want to do their own thing.
Since there is a compliance requirement, accountants are the first port, if not the only port of call for SMSF trustees.
Accountants are service providers. We are on the clock for everything we do, there is no fat in these fees.
Financial planners charge “looking after” fees, regardless of whether they are doing any work or not. You have the capacity to sit down for chats, navel gaze and make suggestions because you are always getting paid. Yes, yes, you may call it “fee for service” but its not really. Its just 1% of everything a client is worth divided by 12 and billed monthly. Whether any real “service” actually happens, you are still getting paid.
So don’t make suggestions about what accountants should or shouldn’t do when you don’t have a basis of comparison.
Next time you want to have a “chat” with a client’s accountant, just remember he is not getting paid by the client to have an unsolicited discussion about their affairs, but you are.
If an SMSF trustee wants to be self-directed then that’s their call. If they want an accountants help, then they have to ask for it [u]and[/u] pay for it. It like going to the doctor!
A lump sum withdrawal is a debit against the transfer balance account and would be reported in a TBAR.
Liam these comments are inflammatory and defamatory – you should know better than headlining these sort of comments – I am both an accountant and an adviser and these sort of comments do everyone a disservice. I as I am sure everyone has war stories that would make peoples hair curl. What we should all be trying to do is to work together for the clients good and to do the best for our clients. Educating accountants, advisers, Trustees and members about what is going to be required moving forward. This could have been achieved without the sensationalised headline.
The choice of headline is up to the editor and the author of the article and I am neither if you read it carefully. I stand by my Advice that we will need quarterly meetings or phone calls with trustees going forward to comply with reporting requirements.
Trustees will also need to decide in advance if a payment is an income stream or lump sum commutation in advance.
Both of these mean a change to the current practice of meeting with trustees once to twice per year.
So if you see past the headline I think you will find it hard to justify a case for your claim defamatory comments and if you believe that there are some outdated practices out there then you are dreaming.
Happy to discuss this if you want to call me and drop your anonymity.
Helen, Pension payments aren’t reportable but Lump Sum commutations are reportable. Many people will take the minimum required pensions and then any amounted needed above that minimum as lump sums. Lump sums commutations reduce the amount of TSB and need to be reported from 1 July 2018 on a quarterly basis for member’s with more than $1m balance. Therefore you need to decide with ad-hoc payments if they are to be treated as Pensions or Lump Sums on a quaterly basis and before the payment is taken as best practice.
What does it matter if payments are “ad hoc”. As long as the minimum pension payments are met for the year – how does it matter how the money is taken out – as long as there are more than 2 withdrawals? Why is this reportable?