Administration, Compliance

Periodic processing creates income leads

SMSFs have until 31 March to register to continue to use OTC instruments in portfolios.

SMSF accountants should be moving to a periodic processing model rather than remaining on annual processing as it creates new client opportunities and services that can be charged for.

“[Previously], the cycle of work in accounting practices was quite defined – we were busy from February to June, we had some free time in July and August, we were busy for a few months and then we got a break over Christmas before it all started again,” Class client manager Stefanie Johnson told the firm’s webinar today.

“But we’ve seen a break in this cycle over the last five years, which means most accountants aren’t getting a break at all. When one lodgement date is done, you need to work towards the next.

“And the expectations of what accountants need to do, both from a compliance and client expectations point of view, is getting more and more demanding.”

Johnson said the past financial year was particularly demanding on accountants dealing with SMSFs compared to other years due to claiming capital gains tax relief, the transfer balance account report (TBAR) and exempt current pension income (ECPI) changes.

“Reporting TBAR balances will require super funds to be processed periodically, not on an annual basis, which is a complete shift in process for most accountants,” she said.

“While these additional compliance hurdles have caused a lot of stress and more work for your practices, don’t underestimate the opportunities that these have opened up.

“Periodic processing – which can mean monthly, quarterly or even value processing – ensures that you have greater insights into what your funds are doing and how they’re performing.

“This can open up conversations with clients that you’ve never been able to have before, and you’ll become more proactive than reactive, and clients will value the advice you provide, which can open up new streams of income from additional services you provide.”

She added accountants are in a position to identify when a client has breached a contribution cap and take action to avoid them paying tax penalties, or if funds have been withdrawn from the SMSF without meeting a condition of release, for example.

While many accountants have moved to periodic processing, not all have, she noted.

“It’s now considered best practice and [from our interactions in the market] these practices weren’t stressed towards year-end since they were dealing with their clients more regularly,” she revealed.

“And they’ve been charging more regularly for their services, as opposed to just when the work is done, which has seen a positive shift in their cash flows.

“Periodic processing is becoming a requirement to meet TBAR and ECPI requirements, but there’s also the demand from clients for more real-time reporting.

“So if you’re not offering this service, it’s most likely that an accountant nearby is.”

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