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Monthly TBAR regime to hit accountants

The ATO’s development of an SMSF event-based reporting regime that will help administer the new transfer balance cap reporting has the potential to push local accountants out of the SMSF administration sector, playing into the hands of major administrators, a specialist SMSF adviser has warned.

The SMSF Coach financial planner and SMSF Specialist Advisor Liam Shorte said the new regime was likely to be in the form of a report to be called the transfer balance account report (TBAR).

“At this stage, nothing has been finalised but the TBAR reporting regime is expected to be as follows: where the event is a pension being commuted in part or in full or a rollover occurs, it must be reported to the ATO within 10 business days after the end of the month that the event occurs,” Shorte explained in a recent online post.

“[Also] where the event is the commencement of a pension, it must be reported within 28 days of the end of the quarter that the event occurs.”

The ATO is expected to introduce a transition period for events that occur in the first part of the 2018 year.

“Where the event is the commencement or commutation of a pension, that event does not need to be reported until the SMSF is due to lodge its 2017 tax return, typically before May 2018,” Shorte clarified.

“However, all evens that occur after that date have to be reported in the normal manner, i.e. monthly or quarterly.

“The transition period will not apply to some events, such as rollovers.

“For many accounting practitioners and SMSF trustees, this will be a fundamental change in how they manage the administration of their fund.”

He said where an SMSF trustees needs to commence or commute a pension, they can no longer see their accountant/administrator once a year.

“They will have to see their administrator before, or soon after, an event occurs,” he warned.

“While accountants may have to prepare real-time accounts so that they can lodge such reports, they will find it hard to pass on the additional costs to trustees and many will just not be able to cope with regular reporting.”

However, it was unlikely many, if any, existing SMSFs administered by suburban accountants were capable of reporting on a monthly basis, he noted.

“For example, just a simple end-of-year reconsolidation of accumulation and pensions will now be reported by 10 August each year, but many tax reports from investment managers, Australian real estate investment trusts and platforms don’t come out until after this date,” he said, adding trustees should not panic.

“Many SMSFs will have no TBAR reporting obligations because they have no pensions or they are not starting any new pensions or commuting any existing pensions.

“However, if you are an SMSF trustee that may be affected by the new TBAR regime, you should ensure that your accountant/administrator have systems, staffing and processes in place that will enable your fund to comply with this new reporting obligation.”

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