Advisers should use technology to avoid inefficient transfer balance account reporting (TBAR), a compliance expert has said.
Philip Boadi, of the compliance team at Class, presented at a Self-Managed Superannuation Fund Association event called “TBAR reporting – what you really need to know”. He said that using technology to automate reporting was the best way advisers and fund trustees could avoid falling afoul of the Australian Tax Office.
“Technology is able to automate most of the common events that need to be reported by an individual,” Boadi said, “such as when you commence pensions, when you do a pension commutation, convert a [transition-to-retirement income stream] TRIS to retirement phase, and even for settlement structured payments.”
This would not only help avoid ATO penalties, but also increase process efficiency, Boadi said.
“Even for events that are rare or one-off or more difficult to automate, most software is able to enable you to create manual lodgement for those events and save you a fair bit of time. Software that supports TBAR reporting usually has a dedicated console where you can see the events that you need to report,” he explained. “The systems will automatically pick the event up as you process it and let you know you need to review.”
TBAR reporting is part of the newly established obligations SMSF trustees are required to fulfil in accordance with the government’s transfer balance cap rules and event-based reporting framework.
From July 1, 2018, trustees must report events that affect a member’s transfer balance cap, now set at $1.6 million, using the ATO-approved TBAR form. All SMSFs with members in retirement phase must complete and lodge the form, which helps the ATO keep track of contributions, payments and balances.
Boadi said the ATO told Class the reporting errors were already piling up.
“After the first lot of reporting, the ATO did come back and say most of it was not reported correctly,” Boadi told the assembled SMSF Association members.
The most common errors, he explained, were incomplete mandatory data, such as tax agent information, incorrect fund ABNs and wrong member details such as name, street address, tax file number and date of birth.
It might take advisers some time to adopt the appropriate technology for the new reporting process; meanwhile, Boadi said, mistakes will continue to come.
“As we all know, if you are completing things manually, it’s prone to errors, or you may complete a section that you’re not supposed to,” he said.
He noted that the Tax Office would probably make allowances for advisers getting used to the processes, and at this stage would be more interested in facilitating compliance than handing out penalties.
“The ATO has communicated that, in the first year, its main focus is to ensure that it is helping trustees meet their obligations,” he said.
