Many SMSFs not prepared for SuperStream, wealthdigital says
While they are generally viewed as a positive change for self-managed super funds (SMSFs), regulations that would apply SuperStream data standards to the SMSF sector more extensively from the end of November 2019 are set to create potential issues, according to Rob Lavery, technical manager for online advice portal wealthdigital.
“The SuperStream regulations would require SMSFs to provide a range of information to the ATO (Australian Taxation Office),” Lavery said. “This information includes a unique superannuation identifier, likely to be an ABN, bank details for electronic payment and an internet protocol or other digital address.”
“This information would allow a freer transfer of data and monies between SMSFs, as well as between SMSFs and APRA (Australian Prudential Regulation Authority)-regulated funds. It would facilitate easier consolidation of super accounts for SMSF members.”
However, Lavery cautioned that this “freer transfer of information and funds” will come with a greater administrative burden – one that many funds may not be prepared to absorb.
He pointed to a report from the Australian Securities and Investments Commission which found that 78 per cent of new SMSF members, and only 57 per cent of existing members, used a financial planner or accountant when establishing their fund.
The remainder relied on a range of sources, such as family members, colleagues and real estate agents, or no one at all, he said.
“In the best-case scenario, the trustees of over 100,000 SMSFs in Australia are receiving no active support regarding how to run the fund and the true numbers are probably higher,” Lavery said.
“How will these funds navigate their SuperStream obligations when they have no one advising them who is obliged to stay up to date with the rules governing SMSFs?”
But according to Lavery, the situation is not without some hope.
“It seems likely that the ATO will look to assist SMSF trustees in adjusting to their SuperStream obligations. A period of limited enforcement is possible. The annual audit will also provide a backstop when mistakes are made,” he said.
“That said, those trustees currently operating without support would be wise to proactively seek advice to assist in the process. Whether this comes from a planner, accountant or administration service, it would be money well spent.”
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