Increasing the regularity of SMSF processing is key to ensuring administrators meet their compliance requirements under new super rules, according to a recent white paper from SMSF administration software provider Class.
The paper said the new transfer balance cap and event-based reporting framework, as well as the revised exempt current pension income (ECPI) guidelines, can be potential pitfalls for administrators unless they opt to process their funds more frequently.
“From a compliance point of view, the ATO now expects administrators to more proactively manage their SMSFs. In many cases, the practice of processing funds annually is no longer enough to ensure SMSF clients meet their growing compliance requirements. It can also result in missed exempt pension income,” it said.
The increase in reportable events under the transfer balance account report system was a major factor in creating a potential problem area for administrators that continued to report annually as it was more likely to result in a reportable event being missed, it noted.
It cited the high complexity of ECPI calculations following changes to the ECPI guidelines as another issue for administrators to consider as part of their reporting and record-keeping requirements, and recommended administrators process their affected funds on a monthly or quarterly basis in order to ensure compliance.
“Moving to more regular fund processing will no longer be optional as soon as SMSF administration becomes doubly demanding and the ATO pushes for more transparency. By switching to more regular processing, you can meet your clients’ compliance requirements and reporting expectations, provide more value for them and potentially improve your cash flow,” it said.