Accounting experts have raised concerns business owners and individuals still have their heads in the sand over new superannuation rules, as accountants report chaos in determining how the new system applies to their clients.
Speaking to The Australian this morning, head of the Financial Planning Association Ben Marshan said the implementation of the changes, which came into effect on July 1, has been “a shemozzle”.
These concerns also backed up by the likes of The Tax Institute, with superannuation committee chair Daniel Butler saying the accounting sector will likely have to raise even more questions about the policies as new “sticking points” emerge.
The concerns are around how individuals can comply with the $1.6 million balance transfer cap on a case-by-case basis, as well as which super fund members are eligible for the capital gains tax relief policy, which was to be put in place for members who had to make changes to their affairs this year in light of the new rules.
However, superannuation experts tell SmartCompany this morning the real concern is that some super account holders are not seeking financial advice at all, or only doing so once it is too late, because this causes a headache for both accountants and individuals alike.
“There’s an expectation that there’s a large percentage of members who didn’t seek any financial advice [prior to the changes],” says Adrian Raftery, associate professor of financial planning and superannuation at Deakin Business School.
This is presenting challenges for accounting professionals, given they have been asked to hit the ground running and get across the new changes right after tax time. Self-managed super fund holders tend to shop around for auditing work because they are focused on keeping costs low, and many have not acted to change their affairs before the changes came into force, meaning accountants could be faced with complicated situations and paper trails from new clients.
“It’s a lot easier to do things prior to a key deadline — once the deadline has occurred, you can’t just sit down and go, ‘let’s set up a super re-contribution strategy’. Superannuation is very restrictive in terms of guidelines,” Raftery says.
Accountants and auditors will need to keep more detailed records than ever before, Raftery believes, particularly because the $1.6 million cap for retirement savings accounts ais designed to incrementally change over the years to account for inflation.
Chief executive of the SMSF Association John Maroney says reports of chaos within the system are overblown, and super fund members and the profession need to keep in mind that the suite of changes enacted by the federal government are complicated to start with.
This makes it critical that super fund holders seek the right advice.
“There are complexities across the whole suite of changes, and for those who don’t have advisers, they need to go find one,” Maroney says.
While the self-managed super funds sector accepted there would be complicated changes to work through, Maroney says this process won’t happen overnight, for accounting professionals or individuals.
“It will continue to cause confusion, though most of the information is out there now,” he says.
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Maroney predicts it will be at least a “12-month cycle” before the sector is fully across what all changes mean, because it will take until the end of a new financial year to see how the new rules apply on an individual basis.
The Australian Taxation Office has provided a number of resources for do-it-yourself super fund members to explain what the new changes mean for them now they have been implemented, and advises members to seek individual financial advice.