The introduction of the SuperStream system to SMSFs with regard to benefit rollovers has given fund management increasing importance due to the three-working-day time frame associated with these transactions, a technical specialist has said.
The protocol specifies rollovers must be made within three business days of when the request to transfer benefits is made and this requirement now means different considerations must be taken into account before these changes to the fund can be made.
“[Members need to think about] when the official request for the rollover is being made and is that being made at the time the trustees of the SMSF are ready to make the rollover,” Accurium head of education Mark Ellem said during a recent technical webinar.
“So if there is an expectation a member is going to roll over [their benefits], then the fund trustees can prepare for that rollover and then when [the fund] is in a position to easily execute the rollover, [meaning] it’s got the balance, it’s got the sufficient cash, then the member can make the official request.”
Ellem pointed out it is only important for an SMSF to have its financial information and liquidity level in order to process transactions via SuperStream as in specie rollovers are not captured by that system.
He warned practitioners about the audit implications for breaches of the three-day rule, but offered a reason for optimism with regard to regulator enforcement.
“If [the transfer is made] outside the three days, then that potentially is an audit qualification [item] and may [give rise] to a contravention report as well,” he noted.
“This [would also] technically be a breach of the operating standards and therefore an SMSF admin penalty could apply for a breach of [this kind].
“My expectation [though] is like [with] other new systems, [such as] the introduction of the transfer balance account reporting regime, that the ATO will take more of an education approach to this rather than a compliance [one] and hopefully simply issue warnings rather than penalties.”
This week the ATO released information to address some common issues arising from the early implementation stages of SuperStream for SMSFs.
