- SMSF Association Media Release
The SMSF Association is urging the Australian Taxation Office (ATO) to adopt a practical approach to the introduction of the Transfer Balance Account Report (TBAR) to give SMSF trustees more time to adjust to the new requirements.
In its submission to the ATO’s Transfer Balance Cap and SMSF ‘Event-Based’ Reporting Position Paper, the Association supports ‘option 2’, which means that from 1 July 2018, SMSFs will have 28 days after the end of the relevant quarter to report, with two exceptions, all transfer balance cap (TBC) events.
This position is strongly supported by the Association’s membership, with 90 per cent of those responding to its survey on this issue supporting ‘option 2’.
The proposed transition period is to 1 July 2020, with the ATO’s proposed reporting standards ultimately requiring SMSFs to lodge a TBAR in 10 days after the month the transaction occurs, bringing SMSFs into line with other superannuation sectors.
SMSF Association CEO John Maroney says: “We believe that quarterly reporting will allow for a smoother transition to event-based reporting as trustees and their advisors will have more time to ensure that reporting obligations are met after a relevant TBC event has occurred.
“Shifting pension reporting to an event-based approach from the current annual method is a significant change for the superannuation system, especially for SMSFs.
“It is important that the ATO applies due caution in the design and implementation of TBAR and allows an appropriate transitional period to ensure minimal disruption, with less than half of the respondents to our survey saying they are ready for the introduction of event-based reporting.”
The survey also highlights a general concern from members about SMSF advisors’ ability to cope with the significant amount of changes in the superannuation environment and the increased costs for clients driven by extra reporting requirements.
“This is hardly surprising. It’s a common theme throughout the SMSF industry that the industry is currently overwhelmed with the superannuation changes taking effect from 1 July 2017, the introduction of the licensing regime for accountants and the usual ongoing compliance requirements.”
In its submission, the Association has suggested that during the transition period, reporting should be limited to fund members who have a total superannuation balance of more than $1 million to reduce the reporting burden on advisors and trustees. This would drastically reduce the number of SMSF members who would be required to comply with TBAR obligations.
The Association also advocated for flexibility around the two-year transition period to 1 July 2020 if evidence presents showing the sector is still not ready.
“We believe that the ATO should consult with the SMSF industry in early 2020 to understand the readiness of the industry to shift to monthly reporting. This will give the ATO the knowledge and flexibility to determine whether an extension of the transition period is warranted.
“If the industry was not in a state of readiness for monthly reporting due to unforeseen circumstances such as problems engaging with trustees, increased costs and system design failure we would expect the transition period to be extended,” he says.