An SMSF specialist has highlighted the potentially onerous nature of the new requirement to furnish a trust income schedule (TIS), as well as one allowance in the rules that might make the obligation easier for advisers.
“For individual taxpayers there is a limit [as to how many TISs they have to complete and it is] 30. So if you’ve got an individual taxpayer who is receiving more than 30 distributions [from a trust or managed fund], they only have to complete 30 of these, so if they’ve got 35, they consolidate the last five and put them onto one [schedule],” Accurium head of SMSF education Mark Ellem told delegates at the Accurium SMSF Compliance Day 2024 held in Melbourne last week.
“For all other entities, including an SMSF, there is also a maximum, but it’s little bit higher – 150. I can see advisers now thinking about their client bases and trying to determine which of them have a lot of investment in trusts and managed funds and realising I’ve got to fill out one of these schedules for each one.”
However, Ellem revealed the situation is not as severe as it appears to be at face value.
“The good news is if the SMSF is invested in a wrap platform that provides a consolidated report, so there is one report for all of the managed funds in question, you only have to fill out one of these,” he noted.
“But that is going to depend on how you account for that wrap or consolidated platform. If you record it as one line in your accounting practice, so it just shows up as XYZ Wrap Account, then you only have to complete one [TIS].
“If you ignore the wrap platform and you report all of the underlying investments separately, so all of the underlying managed funds separately, then you’re going to have to complete a separate [TIS] for each [item].”
He pointed out all wrap platforms should have taken note of this new compliance obligation and automatically prepare a managed fund distributions report for TIS purposes.
The requirement to furnish a TIS took effect from 1 July 2024 as part of the Modernisation of Trust Administration Systems project and will affect lodgements for the 2024 and later financial years.
