In a submission to the ATO’s consultation, the Tax Institute said it broadly supports a simplified transfer balance account reporting (TBAR) system for SMSFs.

“We consider that SMSFs should be encouraged to report regularly, but note the need to ensure that SMSF trustees are not placed under an excessive compliance burden,” The Tax Institute said in its submission.

The submission stated that the new TBAR system for SMSFs should begin from 1 July 2023.

“We note that tax professionals have faced a difficult period over the previous two years, focussing on economic stimulus measures and business survival, often without recompense,” the submission said.

“Further, during 2022 they will be required to adopt to new tax compliance approaches such as adopting phase 2 of the single touch payroll, and addressing risks under PCG 2021/4: Allocation of Professional Firm Profits while also assisting clients with any remaining stimulus measures.”

It also noted that tax professionals would continue to face challenges with high rates of absenteeism caused by the Omicron COVID-19 variant.

Adopting the new TBAR system for SMSFs from 1 July 2023, the submission explained, will allow tax professionals to ensure they are ready to adopt the increased reporting criteria.

“It will also allow SMSF trustees sufficient time to better understand their reporting obligations and enable them to more readily meet the new reporting requirements,” it said.

Frequency of future reporting for SMSFs

The Tax Institute, in the submission, stated that quarterly reporting strikes a reasonable balance between ensuring individuals have the relevant information without placing most SMSF trustees under excessive compliance burdens.

“We also consider that SMSFs should be supported and encouraged to report earlier and more frequently rather than being required to do so,” the submission stated.

“Examples of the relevant support include a safe harbour for reporting best estimates, regular communications and training from the ATO to SMSF trustees regarding their reporting requirements, and frequent reviews of the relevant forms and processes to ensure an efficient and simple self-reporting environment.”

The Tax Institute noted, however, that SMSFs with small balances are likely to face increased compliance costs with more regular reporting, which could impact members’ balances.

“Further consideration should be given to allowing SMSFs with small balances the option of annual reporting to reduce the costs and compliance burdens. For example, an annual reporting system could be used for SMSFs with balances below $500,000,” it explained.