A single set of annual reporting deadlines should be created for self-managed super funds (SMSFs) in order to reduce red tape and prevent increased costs that would arise from quarterly reports.
In a pre-Budget submission from the Tax and Super Australia and the Self-managed Independent Superannuation Funds Association, the organisations said a move to quarterly reporting of transfer balance account reports (TBARs) would create an administrative burden.
“The ATO has recently indicated that they intend to move from the current regime where some SMSFs can lodge their transfer balance account reports (TBAR) annually to a regime where all SMSFs must report their TBARs quarterly.
“Rather, we suggest that there should be single set of annual reporting deadlines for all SMSFs, which will also assist with streamlining the reporting arrangements. This would reduce red tape and allow SMSFs to complete all their reporting at once – eg tax return, financial statements and TBAR.”
Problems posed by the move to quarterly reporting would be particularly hard on SMSFs with only one or two members as they may be required to seek advice more frequently which would increase costs over time.
“SMSFs that do not have specialist SMSF software to lodge a TBAR with the ATO will find it extremely difficult to keep on top of their TBAR compliance obligations and may cause additional penalties for late lodgement of a TBAR.
“This may require SMSF trustees to seek advice from their accountant/tax agent on a more regular basis to help meet their reporting obligations, which will increase the cost of running an SMSF in the long run.”
Meanwhile, the organisation added the auto non-compliance for breach of 17A of the Superannuation Industry (Supervision) Act should be removed in line with directives for other breaches.
“Under the current legislative settings, if a self-managed superannuation fund (SMSF) breaches section 17A of the Superannuation Industry (Supervision) Act 1993 (SIS Act) or otherwise fails to satisfy the definition of an Australian Superannuation Fund, the SMSF is automatically made non-compliant and is issued with a tax penalty that is equal to almost half the value of its assets.
“This is to be contrasted with other breaches of the SIS Act where the ATO has a discretion as to whether to make the SMSF non-compliant. The Joint Bodies believe the auto non-compliance for breaching section 17A, and failing to be an Australian superannuation fund, should be replaced with the ATO discretion that applies to other SIS Act breaches.”
