Two major accounting bodies have argued on a variety of grounds against the proposed imposition of a new deadline by which SMSF financial statements must be prepared.
CPA Australia and Chartered Accountants Australia and New Zealand (CAANZ) tabled their joint submission to Treasury as part of the consultation process regarding the “Miscellaneous amendments to Treasury portfolio laws 2020” exposure draft and rejected the proposed changes firstly because the objective of them has not been made clear.
“This was a policy change that is both unexplained and unexpected,” CAANZ superannuation leader Tony Negline said.
With regard to the policy objective of the exposure draft, Negline added: “This proposed policy also failed to set out the problem which it is intending to solve and we look forward to working with Treasury on having a problem-led approach in the future.”
CPA Australia external affairs general manager Jane Rennie concurred with this view.
“It’s not clear what problem the proposed measure is seeking to cure, but it is clear that it will have unintended and negative consequences. We do not support this measure and encourage Treasury to withdraw it,” Rennie said.
A second concern and reason the bodies cited to oppose the amendment was doubt over whether the information required to comply with the new deadline would be available.
To this end, CPA Australia and CAANZ claimed the requirement for newly established SMSFs and funds lodging their annual return in arrears to have financial statements completed 45 days before the 31 October lodgement deadline, being 16 September, was unrealistic as member feedback indicates investment platforms and administrative services often do not supply the relevant information until September or later.
“SMSF trustees will be disproportionately disadvantaged by the proposed measure. APRA (Australian Prudential Regulation Authority)-regulated superannuation trustees have access to real-time information sharing with third parties and other technology advantages due to their scale. SMSF trustees are more reliant on third parties for reporting and subject to their time frames,” Rennie noted.
“The 45-day deadline for completing accounts is impractical and will increase the likelihood of breaches by trustees who are unable to gather the necessary information within that time frame.”
Finally, the two professional bodies pointed out having the proposed change implemented from the 2021 financial year onwards is unreasonable given the additional workload their members are experiencing as a result of the coronavirus.
“Accountants are experiencing enormous pressure due to their frontline role in assisting consumers and businesses manage the impacts of the pandemic. The proposed measure and its consequences are an unwelcome development at an inopportune time,” Rennie said.
The joint submission did, however, suggest the amendment be implemented from a later date should it receive government approval.
In addition, Negline pointed to other worries regarding workload the exposure draft has caused among CAANZ members.
“Our members have told us that to force SMSF trustees to prepare accounts and financial statements well over a month prior to the lodgement due date will add to regulatory complexity and create administrative issues,” he said.
Other stakeholders had earlier criticised the surprise nature of the proposed changes.