Software maker BGL says that the ATO has “significantly underestimated” the complexity of the new Transfer Balance Account Report (TBAR) requirements.
BGL has been running its #TellTheATO campaign, calling on the ATO to rethink its approach to TBAR.
“The ATO has certainly made some changes to the initial implementation proposals but our research (and that of many others) tells us these changes have simply not gone far enough,” said BGL.
The ATO, which recently released the TBAR form, and will soon respond to the consultation on a two-year TBAR transition period, says that SMSFs with “relatively straightforward affairs” are likely to only have to report a few events per member over the life of the fund.
BGL estimates that at least 150,000 SMSFs will need to report TBAR events to the ATO in 2017/18, “and with many pension strategies involving regular pension resets, this number in our view would repeat or even increase in future years”.
The software maker also calculates that approximately 290,000 SMSFs will need to comply with the Transfer Balance Cap requirements, “adding significantly to SMSF administration, audit and advice costs”.
“But it is not only those SMSFs that need to report that will incur TBAR reporting costs” said BGL Managing Director Ron Lesh.
“SMSF administrators are going to need to review all the funds they administer on a regular basis to determine whether TBAR reporting is required – this will add huge (unnecessary) costs to SMSF administration that will be borne by SMSF trustees through higher fees.”
“This is further exasperated by the ATO’s wish to have all SMSFs provide TBAR reporting – whether the member balance is $150,000 or $1m. Really this is just overkill – big brother really does seem to have gone mad.”
BGL has introduced features to Simple Fund 360 to help accountants and SMSF administrators deal with the changes, but Lesh said: “We can’t do everything.”
“There is always going to be a significant amount of manual work for SMSF administrators where this level of detailed reporting to the ATO is required,” he said.