By Philip La Greca
With major changes announced for APRA funds reporting, the question of whether the SMSF sector is next looms large in the sector. The real question is whether your SMSF clients are ready and what needs to do be done next.
A change for APRA regulated superannuation funds has been finalised from 1 July 2019 with the full transition away periodic reporting of contributions and benefits - bringing APRA funds to a closer to a real time reporting mechanism.
Instead of doing annual contribution reporting due by 31 October each year (still applicable for 2018/19), the new rules create an obligation to report within 10 business days of the contribution or transaction occurring via the Member Account Transaction Service (MATS).
At the same time, events such as opening or closing a pension account will need to be reported within five business days of the event through the Member Account Attributions Service.
Both systems will allow the ATO to monitor and assess the Contribution Caps and Transfer Balance Cap more quickly.
On the other side of the equation 1 July 2019 also sees the inclusion of small business into the Single Touch Payroll system, which results in employers required to report when a superannuation obligation arises to be paid every pay day to the ATO.
Micro businesses that only have family members or directors as employees (sounds like the relationship between SMSF members & trustees) will also be brought into the STP reporting cycle but do not need to start reporting to the ATO until 1 July 2020.
This will provide the ATO with additional information to assist in solving one of the largest problems in the superannuation system - the non-payment of superannuation guarantee contributions. This has been estimated to be around $2.7 billion every year since 2011/12.
By being able to cross-reference the employer information from STP with the superannuation fund data from MATS, gaps between what an employer says they are contributing - and what they are paying - can be easily identified. Any recalcitrant employers can then be pursued by the ATO.
Of course, the one source of data which will not be picked up in this process is SMSFs. But for how long?
As part of the push for integrity and accuracy for the wider superannuation system, somehow SMSFs will need to be brought into the fold.
This can either be by a blanket requirement for more frequent electronic reporting to the ATO (probably via the SuperStream gateways), or a more targeted approach where electronic reporting becomes a mandatory requirement of any superannuation fund wishing to accept Superannuation Guarantee contributions or pay a retirement income stream.
Trustees and practitioners are well advised to start ensuring you have the right kind of future-proofed support to meet regulatory needs. This involves a combination of software with automation and datafeeds, and administration capabilities that allow real time reporting to the ATO for when the spotlight is eventually turned to the SMSF sector.
Either way, the days of annual reporting in arrears seem numbered as SMSF will need to advance towards providing reporting mechanisms in line with ATO requirements.
SuperConcepts is an SMSF administration and software provider for SuperMate – powerful SMSF software with over 200 datafeeds and more constantly being added.