The proposed Division 296 tax will disproportionately hit the SMSF sector at a time when auditors are assessing the investment choices made by trustees and they should be looking at technology that will save them time, according to a portfolio tracking service.
Sharesight chief executive Doug Morris said the increasingly complex and global investment choices made by trustees meant new tools were required, particularly when trustees and practitioners needed to track whether an SMSF portfolio was getting close to the $3 million threshold for the proposed new tax.
“Going forward, exchange rates could be critical to whether a member’s balance is above or below $3 million on 30 June. Proactively managing that investment risk is easier when automated portfolio tracking is turned on,” Morris said.
According to a survey by Deloitte and the Institute of Managed Accountants, 75 per cent of accounting processes are still manual, which costs auditors and accounting firms precious hours at tax time.
Research carried out by Sharesight found 65 per cent of its premium users trade via two or more brokers and the average user holds 34 individual assets across three portfolios.
“Trying to cope with complexity manually is very difficult at scale when you’re chasing dozens of dividend statements and contract notes for trades,” Morris said.
“Investment technology elevates the quality of service provided to the client in a way that spreadsheets can’t.”
The Sharesight report highlights one financial firm that reported a loss of around 300 hours a year through manual reporting.
“Based on the average accountant’s wage in Australia, that’s $11,538 that they could be saving and reinvesting in their business,” it said.
