The new superannuation legislation’s introduction of entirely new concepts and procedures, combined with the very short time allowed for consideration for how they will work in practice, will result in a compliance logjam next year, according to the SMSF Owners’ Alliance (SMSFOA).
The draft legislation anticipated that on or before 1 July 2017, people would know their super balance down to the last dollar, SMSFOA executive director Duncan Fairweather said.
“However, for SMSFs in particular, it can take months for the trustees and the funds’ accountants to assess the value of the assets in the fund, identify the earnings, calculate the tax due and prepare tax returns,” Fairweather noted.
“Another compliance is that people with SMSFs may also have super accounts with APRA (Australian Prudential Regulation Authority) funds and/or be members of defined benefit schemes.
“It is not clear how relevant information from different funds and accounts will be drawn together so adjustments can be made to balances to comply with the new transfer balance cap and the new limits on non-concessional contributions.”
As there were more than 500,000 SMSFs, most with multiple member accounts, the SMSFOA said it expected there would be a serious compliance logjam in 2017 as fund trustees and their accountants and auditors came to grips with the new requirements.
“We anticipate there will be a lot of confusion and honest mistakes made before the system is bedded down,” Fairweather noted.
“The period of 60 days allowed for the correction of excess amounts held in a pension account is too short.
“We recommend that a period of at least 12 months be allowed for implementation of the new measures.
“During this period there should be no penalties applied for holding an amount in excess of the transfer balance cap in a pension account.”