It is inevitable unintentional errors and unforeseen consequences will result from the new transfer balance account reporting (TBAR) requirements, but the regulator needs to ensure these elements are eliminated in an expedient manner for the good of all superannuants, an industry leader has said.
“There is no doubt in my mind that there are going to be people that are inadvertently stung by the TBAR requirements,” Chartered Accountants Australia and New Zealand head of superannuation Tony Negline told selfmanagedsuper.
Negline said this will be the case because individuals will not immediately recognise the importance of telling their accountant or financial adviser about all of the retirement savings interests they might have and not just their SMSF interest, a practice they have grown accustomed to over many years.
According to Negline, the ability of individuals with an SMSF total super balance less than $1 million to include any transfer balance account activity in their standard fund annual return may contribute to this predicament, seeing these people will have effectively experienced no real reporting regime change.
He likened the current situation to another period of change the superannuation sector recently went through.
“It’s like the excess contributions tax regime. When that came in there were inadvertent errors because people accidentally slipped over the limits and they didn’t actually realise the implications of what that meant,” he said.
“It’s a typical environment where it will take us a little bit of time to figure out how it all works.”
He said he hopes the process of implementing the TBAR requirements to the point where the system is working as it was intended to does not take as long as it did for the excess contributions tax regime.
“It took them 10 years to sort out a good model for the excess contributions regime from a legislative penalty regime perspective,” he noted.
“It would be a sad reflection if this TBAR system survives for 10 years and we had another 10-year period before we ironed out all the problems that emerged.”