The SMSF annual return is in the process of being amended to accommodate some of the additional reporting requirements that will arise from the proposed Division 296 tax.
Colonial First State head of technical services Craig Day noted certain aspects relevant to the calculation of the proposed new tax are already being captured by the existing annual return, such as contributions, death benefit pensions, reserve allocations and transfers from foreign pension schemes. However, Day recognised certain elements that to date are not included in the current reporting regime.
“Things like spousal transfers and insurance proceeds are not actually captured and reported as a different figure in the SMSF annual return. So what’s going to have to happen? Well, the ATO is going to have to update their reporting for all funds,” he told attendees of an SMSF Association member webinar held today.
He pointed out for Australian Prudential Regulation Authority-regulated funds this will probably be achieved through the use of an exceptions report.
“[But] for self-managed super funds, the ATO will likely have to go through and amend the SMSF annual return to capture these amounts separately [to allow the regulator] to calculate these amounts,” he said.
“So that will be an ongoing process and, from talking to the SMSF Association, that process has already kicked off.”
He recognised a similar reporting issue exists with elements such as remediation payments.
According to Day, this will have significant implications for fund administrators.
“Obviously the [SMSF administration provider’s] systems will need to be updated for that. So you should see [firms such as] Class, BGL and SuperMate updating their systems to capture these amounts,” he noted.
“So if I’ve got some insurance proceeds, that needs now to be reported in a separate field and can no longer be included [as part of the investment income reporting as it currently is].”
