The SMSF Association has applauded the ATO’s decision to seek industry feedback on a quarterly option for events-based reporting under its transfer balance account report (TBAR) regime.
On Monday, the ATO released a position paper on two possible time-frame scenarios for SMSFs to report events 10 days after the end of the month in which the relevant event occurs or 28 days after the end of the quarter.
SMSF Association chief executive John Maroney said events-based reporting, which is needed to implement the federal government’s transfer balance cap legislation, is a significant shift from the current reporting arrangements.
Hence the ATO’s move to “soft pedal” any changes by presenting advisers and their clients two alternative approaches for comment is welcome, Maroney said.
“We are pleased that the ATO has listened to the SMSF industry’s immediate concerns and feedback, including ours, regarding events-based reporting, and this consultation shows the ATO is willing to work with industry to get the implementation of events-based reporting right for SMSFs,” he noted.
He said he is fully aware some of the body’s members have concerns about the TBAR regime and is hopeful the position paper process will go a long way to resolving any outstanding issues.
“With the introduction of the transfer balance cap, we believe it’s in SMSF trustees’ best interests to report information as soon as possible so details can be shared between advisers, providers and members, and therefore help prevent any notional earnings accruing on excess transfer balance determinations,” he said.
“As such, the association supports in principle the ATO’s approach to administering this legislation, especially as the use of more sophisticated administration technology becomes even more prevalent across the industry.”
Maroney also highlighted that delays in collecting information can result in trustees being charged interest at 7 per cent a year above the 90-day bank bill rate, accruing daily, on excess transfer balance accounts.
He added that until the new proposed reporting regime starts, the responsibility for keeping track of transfer balance account transactions lies with trustees and their advisers and administrators.
“This is an onerous responsibility in the short term and potentially on an ongoing basis and is another reason why the association supports a central repository of up-to-date and meaningful information for the use of members, trustees and their advisers,” he said.
ATO SMSF segment assistant commissioner Kasey Macfarlane told selfmanagedsuper the quarterly reporting scenario had a view over a period of time, until the end of June 2020, for SMSFs to move to report all events on a monthly basis.
“The advantage of that is it allows consistent reporting time frames for all events and it provides a transition period where SMSFs are only required to report quarterly, and the idea is to move monthly,” Macfarlane said.
The industry has until 15 September to provide feedback to the regulator.
Macfarlane said post-1 July, the ATO has had ongoing discussions with industry about its original proposal for the TBAR regime to operate under the model of 10 business days after the end of the month, but has been giving further consideration to the quarterly model.
The TBAR regime requires events-based reporting by SMSFs from 1 July 2018, however, SMSFs are able to commence reporting to the ATO in October 2017.
The ATO position paper on TBAR can be found here.