The introduction of the transfer balance cap from 1 July 2017 created an interesting reporting challenge for the SMSF sector that had historically dealt with compliance on an annual basis.
The decision to finally land on a two-tiered system based upon a Total Super Balance (TSB) threshold of $1 million to determine quarterly or annual reporting was subject to intense debate and lobbying from within parts of the SMSF industry. At this time, not only were practitioners going through the most significant super reforms in a decade, but we were also accelerating into a cloud technology ‘wave’ with practitioners. At the time, I called it ‘TBARmaggedon’.
Moving forward to today, there are now more than 70% of SMSFs administered on cloud software such as Simple Fund 360, Class and SuperMate (amongst others). With many firms having implemented the cloud-based technology into their practice, and some having revised their processes for administration (e.g. regular reporting), it does appear to be an opportune time for the Regulator to reassess the two-tiered system and streamline to a single reporting framework.
The SMSF industry needs to play its role as part of the digital transformation we are seeing in financial services. A good example of this is the SMSF sector recently moving to SuperStream V3.0 to include rollovers and release authorities, aligning itself with the rest of the superannuation landscape (APRA funds).
Alignment to a single reporting framework for transfer balance account reporting (TBAR) appears to an appropriate next step. It creates a simplified system that is much easier to administer from a regulatory perspective. However, the SMSF industry won’t move to the APRA standard of reporting within 10 business days after the transfer balance account event has occurred. The current quarterly system that applies to SMSFs where a member’s TSB exceeds $1 million seems the most likely scenario.
Light regulation to date
When you think about it, the ATO has regulated TBAR reporting quite lightly since its introduction, not enforcing any failure to lodge (FTL) penalties for late lodgement (to my knowledge). This will have to change at some point, ensuring that trustees (and their tax agents or administrators) are complying with the legislated prescribed timeframes.
As we have seen over the past decade, ongoing change has resulted in a greater need for specialisation in this area. With this specialisation will most likely come a greater level of attrition in service providers who can no longer keep up with the regulatory change and increasing price competitiveness through specialists further embracing regulatory technology (RegTech).
The ATO is consulting with SMSF industry stakeholders until December 2021, so here is your opportunity to voice your opinion on any proposed move to a single reporting framework, or simply tell us your thoughts by answering the poll below:
For further details about matters under consultation, visit the ATO website: