The availability of information needed to comply with the ATO’s new real-time reporting requirements remains a concern for the sector, but the regulator’s attitude to the issue remains unchanged, a senior SMSF technical executive has said.
Addressing delegates at the selfmanagedsuper SMSF Professionals Day 2017 in Sydney last Thursday, SuperConcepts technical services and education general manager Peter Burgess said: “Having to regularly report commutations is not the problem here; the problem is having to report the commencement value of a pension promptly.
“Of course, it’s difficult to calculate what the pension balance is going to be until the tax position of the fund has been determined and that typically doesn’t happen until the end of the year when the financial statements are prepared.
“So if we have to report a commencement value before then, it can create some problems and this is the point the industry has pointed out to the ATO.”
According to Burgess, these concerns have largely been disregarded with the regulator effectively telling the industry it has to find a way to overcome this issue.
“They made the captain’s call that the self-managed super fund industry will be required to report the commencement value of a pension within 28 days after the end of the financial quarter with a 12-month transition period,” he noted.
“So we’ve got 12 months to get used to this.”
Despite these practical issues, he declared his support for the ATO’s stance.
“You’ve only got to look at the transfer balance cap as an example as to why we have to move this sector forward,” he said.
“Putting aside all of the regulatory rules as to why we are going to have to report these things 28 days after the end of a quarter, it is clearly in the client’s best interest to report this information as soon as we possibly can.”
Burgess used the situation of where a client might have an excess pension balance.
“The sooner everyone knows about it the better. Why? Because notional earnings will continue to accrue on that excess, so if we’re going to sit back and wait 12 months before we report these balances, we’ve got a problem,” he said.
“And then we’re going to have a problem with liability and questions will be asked by the client as to why you took this long to report to the ATO because they accrued all of these notional earnings and they’ve got to pay more tax than would’ve been the case had it been reported earlier.”
