In a joint submission by Chartered Accountants Australia and New Zealand and CPA Australia to the Treasury, the two accounting bodies have outlined a number of issues with the proposal to prescribe a mandatory date for SMSF trustees to have prepared accounts and statements.
“We do not support this proposal as the objective of this measure is not clear. The purpose of Treasury’s consultation in relation to these miscellaneous amendment provisions is to ‘ensure the law operates as intended by correcting technical or drafting defects, removing anomalies and addressing unintended outcomes’,” CA ANZ and CPA Australia said in the submission.
“However, this measure appears to be new policy, which is unaccompanied by a policy statement setting out the issue or problem which it is designed to address.”
While the submission noted that there are currently no legislative requirements to prepare SMSF financial accounts by a particular date, the problem the proposed amendment is intended to solve is unclear, it said.
The submission stressed that the proposal would impact self-preparers and newly established funds in particular, as these funds are required to lodge their annual return by 31 October.
“Just over 5,000 of SMSF trustees self-prepare and lodge their returns, meaning any proposed requirements need to consider issues such as the timeliness of information from administration services and platforms for SMSF trustees,” it stated.
“Where information can’t be obtained and audited by the return due date due to circumstances outside the trustee’s control, the ATO should provide streamlined lodgement deferrals so the trustee is not exposed to criminal and civil penalties.”
The submission stated that while the measure is due to commence upon the registration of the regulations, Item 70 of the draft regulations clarifies that the measure is to be effective for accounts prepared for financial years 2020–21 onwards.
This would mean that the first due date for the measure to come into effect would be 45 days prior to 31 October 2021 for trustees who do not use a tax agent.
“The explanatory statement to the draft regulations does not provide a stated policy intention in relation to the measure, and we consider that this change should not proceed without express justification,” it said.
“While we do not support the proposed provision, if progressed, we consider that there may be justifiable grounds for postponing this measure to a later financial year.”
The submission pointed out that many CPA Australia and CA ANZ members in public practice have experienced a dramatic increase in workload due to COVID-19-related recession and lockdowns.
“They have worked in a very high-pressure environment assisting clients financially survive this unfortunate period. The delivery of economic stimulus measures through the taxation system means that practitioners are absorbing significant additional compliance burdens and new measures that further increase the reporting complexity should be carefully considered,” it said.
“We consider it would be unfair to place additional pressures on their practices at this time and that further consultation with the profession is required to understand the practical challenges to implement the proposed change.”
The Institute of Public Accountants has also told the Treasury that it does not support the proposed reporting measure, labelling it as a blunt instrument which will be difficult to administer.