The ATO is being urged to adopt a practical, “softly softly”, approach to the introduction of Transfer Balance Account Reporting (TBAR).
The SMSF Association is urging the ATO to give SMSFs more time to adjust to the new reporting requirements.
The ATO has been consulting on different options for a TBAR transition period. The SMSF Association supports ‘option 2’ – which would have SMSFs reporting TBAR events (with some exceptions) 28 days after the end of the quarter from 1 July 2018.
The Association says that this position is “strongly supported” by its membership base, with 90% of those responding to a survey preferring ‘option 2’.
‘Option 1’ would have TBAR events reported 10 days after the end of the month, but with different exceptions. The ATO is proposing that the transition period last for two years, so that from 1 July 2020 reporting of Transfer Balance Account events would be 10 days after the end of the month of the transaction.
SMSF Association CEO John Maroney said: “We believe that quarterly reporting will allow for a smoother transition to event-based reporting as trustees and their advisors will have more time to ensure that reporting obligations are met after a relevant TBC event has occurred.”
“Shifting pension reporting to an event-based approach from the current annual method is a significant change for the superannuation system, especially for SMSFs,” he said.
“It is important that the ATO applies due caution in the design and implementation of TBAR and allows an appropriate transitional period to ensure minimal disruption, with less than half of the respondents to our survey saying they are ready for the introduction of event-based reporting.”
The SMSF Association is also calling for TBAR reporting in the transition period to only apply to SMSF members with a Total Superannuation Balance of over $1 million, to reduce the reporting burden on trustees and advisors.
“This would drastically reduce the number of SMSF members who would be required to comply with TBAR obligations,” said the Association.
Additionally, if SMSFs aren’t ready in 2020 to report on a monthly basis the Association says there there should be “flexibility”.
“We believe that the ATO should consult with the SMSF industry in early 2020 to understand the readiness of the industry to shift to monthly reporting. This will give the ATO the knowledge and flexibility to determine whether an extension of the transition period is warranted,” said Mr Maroney.
“If the industry was not in a state of readiness for monthly reporting due to unforeseen circumstances such as problems engaging with trustees, increased costs and system design failure we would expect the transition period to be extended,” he said.