Every year, the professionals who advise SMSF trustees gather together for a conference. The issues and regulations they discuss are at the cutting edge of what’s going on with SMSFs. And there are some very important changes about to be implemented that you really need to know about.
Electronic servicing address
For example – does your fund receive contributions from a large or medium sized employer (an employer with 20 or more employees)?. If it does, you will need to have an electronic servicing address by 31 May 2014 and you will have had to notify the ATO of that address, along with your ABN and bank details. The electronic service address is different to an email or website address and is also different to your bank details.
There are some exemptions if you have a significant ownership stake in the business but the change is expected to hit thousands of trustees.
This is because from 1 July this year, a new data and payment standard for employer super contribution payments will become a reality. It’s part of the SuperStream reforms, which have been introduced across all superannuation funds to improve efficiency.
The ATO has said it will provide a list of electronic service address providers here. And ATO national program manager, data standards and E-commerce (SuperStream), Philip Hind, said yesterday that he has seen cost estimates for providing this address of around $25 a year. An SMSF service provider, such as an administrator or accountant, may also be able to help.
Borrowing in SMSFs
Assistant Treasurer Arthur Sinodinos also confirmed yesterday that there would be no separate review of Limited Recourse Borrowing Arrangements (LRBA). The previous government had flagged in 2012 that it would be reviewing LRBAs, but Sinodinos said that any review would be incorporated as part of the currency financial sector review.
SMSF Professionals Association of Australia (SPAA) CEO, Andrea Slattery welcomed the announcement and said the association was working on best practice guidelines for LRBAs.
Penalty update
The proposed changes to the penalty regime for SMSF trustees are also now slated to be reintroduced to parliament, which could mean they will come into effect 1 July this year.
These proposed changes will allow the ATO to use less restrictive, and arguably more constructive measures, when trustees breach their requirements.
They will be able to instruct trustees to fix the breach, a power they currently do not have, according to AMP SMSF head of policy and technical, Peter Burgess.
The ATO will also have the power to direct the trustee to undertake education, and with thousands of trustee breaches made inadvertently and accidentally, Burgess expects this directive to be the most widely used.
He said it would be an online course, which means trustees won’t have to be embarrassed by fronting up to classrooms where they would need to admit their breaches to other trustees.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
