Speaking at a seminar, DBA Lawyers special counsel Rebecca James said there will be a huge amount of data going to the ATO once events-based reporting commences, particularly in relation to pension commencements and partial commutations of pensions.
She also believes the amount of commutations may be on the rise which will further increase the amount of information being sent to the ATO.
“We may see commutations becoming more prevalent because with pensions for example, if the client wants to take more than the minimum pension amount, instead of just taking it as a pension which doesn’t give rise to a debit in the transfer balance cap, they may take it as a commutation because that does give rise to a debit, so they can top up their retirement balance in the future,” she explained.
“So we could see commutations occurring more frequently and that puts the pressure on for this [new] reporting.”
Ms James noted that many accountants and advisers have highlighted some of the issues that occurred with reporting under the reasonable benefit limit (RBL) and that it took years for action to be taken.
“Hopefully the ATO’s systems will be up to scratch to be able to handle the volume of reporting,” she said.
“I don’t know what the ATO will do with all this information and whether it will be dealt with on a timely basis. It will be interesting to see to what extent they’re building systems to be able to deal with this, and what they’re going to do with all the information.”
The ATO has said the paper form will likely be available for SMSFs from October, and is in the process of developing an online reporting channel for single lodgement.
“Given there are 500,000 super funds, I would think that a paper-based reporting system will be highly cumbersome so ultimately you would expect it to be moved to electronic systems,” said Ms James.
It will be critical, she said, that once the new reporting requirements are in place, that members are fully aware of what needs to be reported and when in terms of time frame, and the penalties that are involved.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.