Platforms present CGT relief issues

A technical expert has identified a possible problem with the information kept and made available to SMSFs by platform and wrap providers regarding the data needed if a particular fund has opted to take advantage of the capital gains tax (CGT) provisions contained in the super reforms.

“We’re finding a TBAR (transfer balance account report) issue with those funds investing in wrap accounts as to whether the wrap provider is going to keep track of the notional deferred capital gain if it’s an unsegregated fund,” SuperConcepts technical services executive manager Mark Ellem told selfmanagedsuper.

“A lot of the providers will record the reset cost base, but they won’t keep track of any notional deferred gain.”

According to Ellem, this is a new set of circumstances as wrap and platform providers in the past had provided SMSF administrators with all of the tax information needed for reporting on the fund.

He pointed out the current situation presents a problem not only for incumbent advisers of SMSF clients, but in particular for practitioners who acquire new SMSF accounts.

“It’s going to require a practitioner who picks up a new existing fund to service to look at the underlying assets of the fund to see whether the SMSF was eligible for CGT relief back in 2017 and therefore determine if they have to consider whether there will be notional gains there that need to be brought to account and whether the cost base is the correct reset cost base,” he said.

On a positive note, he suggested determining the cost bases should be fairly straightforward.

“The cost base should be fine because it should be reset and you should get those records, and the tell-tale sign will be a whole heap of assets where they were purchased on 30 June 2017,” he said.

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