SMSF data gathered and reported by the ATO requires greater detail to provide a better insight into the trends the sector is experiencing, the head of a specialist administration provider has said.
Class chief executive Kevin Bungard told delegates during a presentation at the Class Connect 2017 conference in Sydney last Friday the record-keeping around audit fees was a case in point.
“To give you a data point in terms of where the data is reported to the ATO from a regulation point of view that is a bit odd is that only two-thirds of the funds actually report paying an audit fee,” Bungard said.
“Now clearly that is not correct. They are just bundling it into the admin fee or elsewhere, but the point is as a regulator you would think they would care a little bit more about what is being spent on audit and that should really be broken out.”
He said an Australian Prudential Regulation Authority-regulated fund would attract immediate scrutiny if it did not disclose the audit fee paid for the year as the regulator would conclude no audit had been performed.
In regard to the new real-time reporting requirements being introduced, he suggested the effect on the sector might be considerably more significant than has been anticipated to date.
“One of the lines that people are using is for most people they will have a reportable event when they set up the pension and then at some point they will drop off the perch, so then there will be a second reportable event for the lifetime of the pension,” he said.
“We think that is a little bit simplistic in terms of what is actually happening, particularly when you think about some of the other things that are likely to happen because of the super reforms.
“One of the strategies that people are advocating is that if you draw more than the minimum required amount in your pension, then you should probably commute it rather than actually take the extra amount out as a pension payment because [a commutation] will give you some space back on your TBA (transfer balance account).”
He added according to Class statistics, around 50 per cent of SMSFs in pension phase are drawing down more than the required minimum amount.
“So if they were all to take up that strategy, that’s a lot more reportable events than people are thinking [will occur] at the moment,” he noted.
