The Australian Taxation Office (ATO) has significantly underestimated the complexity of the proposed Transfer Balance Account Report (TBAR) requirements, BGL Corporate Solutions believes.
The self-managed superannuation fund (SMSF) administrator said the ATO had also underestimated the amount of data that would be reported, and the impact it would have on compliance costs of SMSFs and the super industry.
BGL said approximately 290,000 SMSFs would need to monitor and comply with the transfer balance ca requirements adding significantly to SMSF administration, audit, and advice costs.
BGL noted that the ATO believed most funds started a pension once and after that there would be no further reportable events. However, BGL found that 25 per cent of SMSFs had at least one TBAR reportable event and over 50 per cent had multiple TBAR reportable events.
BGL said this would total to at least 150,000 SMSFs needing to report to the ATO in 2017/18, and with many pension strategies involving regular pension resets, this number would repeat or even increase in future years.
BGL managing director, Ron Lesh, said: “But it is not only those SMSFs that need to report that will incur TBAR reporting costs”.
“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,” he said.
“This is further exasperated by the ATO’s wish to have all SMSFs provide TBAR reporting – whether the member balance is $150,000 or $1 million. Really this is just overkill – big brother really does seem to have gone mad.”