SMSF trustees paddle up the SuperStream

The trustees of more than 130,000 self-managed super funds will be receiving a letter from the ATO about their new electronic reporting obligations. The letter will tell the trustees they must ensure their fund complies with a new government reform – which applies to them from July 1, 2014 – aimed at improving the efficiency of the superannuation system.

Australian Taxation Office

This new data and e-commerce standard, called SuperStream, was a byproduct of the Cooper review into superannuation and was one of the measures in the Stronger Super reform package released by the then Labor government.

The reforms were designed to improve the administration of superannuation funds and included:

• New data and e-commerce standards for super transactions.
• The use of tax file numbers for members as the primary locator for members’ accounts.
• Allowing for superannuation account consolidation.
• Improved treatment of super contributions where there are insufficient member details.
• The establishment of a body to advise the government on the implementation and maintenance of superannuation changes in standards.

This last measure became known as the Superannuation Guardians and has since been scrapped. Another reform scrapped by the Abbott government was a register to be maintained by the ATO of validated SMSF bank accounts. The reason for this having been scrapped is a mystery as it would have made it easier for super funds to establish that a bank account belonged to a complying SMSF and resulted in faster rollovers of members’ superannuation.

At the heart of the SuperStream system is a standard set of minimum conditions for the electronic transmission of superannuation data and payments. In all, there are five standards: business terms and conditions; data message formats; requirements for the communication and security of messages; electronic payments; and verification services.

The new system is being introduced in two stages. Super funds with members who work for a large or medium-size entity – defined as employing 20 or more people – must meet the new data and e-commerce standard from July 1, 2014. All other superannuation funds must comply from July 1, 2015.

To comply, members of an SMSF who are employed by a large or medium-size entity must update their superannuation details with their employer by May 31, 2014. In addition to providing their ABN and bank details, SMSFs must ensure they have signed up with a provider that allows for the electronic transfer of the super contribution and data.

Trustees of SMSFs who use an administration service, or an accountant who processes their superannuation fund’s accounts using a software package, should not have to do anything as the electronic service address for receipt of a contribution data message will be provided to them.

For those SMSF trustees not provided with the required data and e-commerce information, there are several alternatives. Some financial institutions will provide an electronic messaging service that meets the requirements for SMSFs that use their accounts.

One option for SMSF trustees will be an Australia Post service that ensures trustees can comply with the SuperStream data standards. This will cost $25 in the first year and $50 from June 2015.

http://www.smh.com.au/business/smsf-trustees-paddle-up-the-superstream-20140311-34k9m.html#ixzz2vjAi6hGG

ASIC finds no New Daily, super fund conflict

The corporate regulator has found no immediate signs of conflict of interest in relation to the investment of $3 million of members’ money by three industry superannuation funds in media start-up The New Daily.

Late last year, during a Senate Estimates Committee hearing, Nationals Senator John Williams raised the issue over AustralianSuper, Cbus and Industry Super Holdings’ investment in the online publication.

Williams questioned the use of member funds in a media investment and asked ASIC chair Greg Medcraft to examine the situation for possible conflict of interest concerns.

Medcraft opted to take the question on notice. ASIC provided answers to Williams’ questions in a written statement last month.

“As we do with other advertising generally, we will monitor the potential for content and editorial bias on superannuation reporting,”

ASIC said in the statement. “ASIC reviews the communications strategies of super funds to their members … we also review this content to consider whether it is misleading.”

The types of member communication ASIC had reviewed from other funds included websites, e-learning, calculators, seminars, blogs and newsletters, he said.

“In regards to advertising on The New Daily, we note that currently all advertisements are for Cbus, AustralianSuper and ME Bank,” he said.

“The articles currently on the site appear to be neutral and are not biased towards the interests of the industry superannuation sector.

“As such, the concerns in relation to conflict of interest are currently not readily apparent. The majority of superannuation articles appear to be focused on general superannuation education or general discussion regarding changes occurring in the superannuation space.”

ASIC had worked closely with the Australian Prudential Regulation Authority (APRA) on the issue of the appropriateness of funding the site, he said.

“Our understanding is that APRA has made inquiries about the nature of the funding to determine whether this funding is in keeping with the spirit of, and covered under, the sole purpose test as set out in section 62 of the Superannuation Industry (Supervision) Act 1993,” he said.

Excessive contribution provisions impractical

While the Australian Taxation Office (ATO) has withdrawn its proposed action seeking to legally outlaw excessive contribution provisions within an SMSF trust deed as a means to prevent trustees from breaching the non-concessional contributions cap, the practical application of this course of action seems unworkable, according to an expert superannuation lawyer.

ATO

The provisions in question operated by imposing an obligation upon SMSF trustees not to accept excessive non-concessional contributions, potentially making them hold the offending contribution in a trust structure separate to the super fund, Townsends Business and Corporate Lawyers special counsel Michael Hallinan explained at his firm’s latest Bacon Super and Eggs seminar in Sydney.

“I have difficulty with how these provisions can operate. My simple argument is I can’t see how they can originally accept a contribution and then reject it two or three years later when the issue arises,” Hallinan said.

“Bear in mind it is not illegal to make excessive non-concessional contributions. There can be adverse tax consequences, but it is not illegal.

“The other problem is the contribution is not excessive. It’s only the aggregate of the contributions in a financial year which is the excessive component, so it’s not an attribute of the contribution.

“So in my view these provisions don’t work because at the time of receipt you really don’t know whether the contribution is excessive or not, and you won’t know if it is excessive until all the contribution information for the financial year has been provided to the ATO and the ATO does its calculations and works out whether the aggregate of those contributions exceed the relevant caps.”

He did concede those types of provisions could work in the rare circumstance where the trustee knew the specific contribution would lead to a breach of the non-concessional cap at the time it was made.

“I presume once that decision is reached the trustee would immediately have to extract the money out of the fund and pay it into another bank account,” he said.

ASIC names new SMSF taskforce focus areas

The corporate regulator has revealed one-stop shop operators and misleading advertising through social media channels and seminars will be on its self-managed superannuation fund (SMSF) taskforce’s radar in 2014. The decision to expand the SMSF taskforce’s focus was made at the most recent taskforce meeting held earlier this month. ASIC commissioner Greg Tanzer said the taskforce would firstly appoint a small project team to explore the trend of one-stop shop operators that offered a range of services to SMSFs. 
“The project team will investigate the often complex business model structures of these operators and the risks to investors that this trend poses,” Tanzer said. “This area of focus comes in response to the recent collapse of the Charterhill Group, which operated as a one-stop shop providing, amongst other services, advice to clients on establishing SMSFs, rollover of existing superannuation funds into an SMSF, and the sourcing and purchase of investment properties.” The second area the taskforce will expand its work into is misleading advertising of SMSFs. ASIC regularly identified SMSF advertising on websites, in print and on radio that failed to comply with “Regulatory Guidance 234: Advertising financial products and advice services: Good practice guidance”, Tanzer said. “This work will be expanded to cover online advertising channels such as Twitter, Facebook and YouTube,” he said. “We will also be looking at SMSF seminars for evidence of misleading and deceptive conduct, as well as any unlicensed financial services conduct. “Where we identify any breaches, regulatory action will be sought and we will look to issue an alert to industry and the public to be wary of shonky selling tactics at SMSF seminars.” The regulator’s warning on the issue of property spruikers remained the same, he said. “If you are targeting SMSFs, if there is something in your promotion material that says ‘yes, you should use your superannuation for this purpose’, we regard that as investment advice, therefore you need to be licensed and if you aren’t licensed, we’re going to come after you,” he said. “The other thing is the deceptive promotion or indeed potential for fraud. 
“The message for people is that if you see it, let us know and the key message for SMSF investors is that superannuation is a far too important investment for the future to be taken by a glitzy promotion.” The SMSF taskforce was established in September 2012 in response to an increase in geared investment strategies, increasingly aggressive advertising, the collapse of Trio, and the subsequent Parliamentary Joint Committee on Corporations and Financial Services inquiry. 

Why to consider outsourcing?

One should outsource his business or not, is a question among many businessmen.

All businesses have criteria and strategies unique to their business. This may or may not suit other people. There are certain evidences suggesting that outsourcing proves fruitful to majority by allowing you provide best services to your clients. One can expand his specialist services. The main reason is having a pool of quality chartered accountants working under you. Outsourcing reduces the handling cost of projects, tension and burden of completing projects within deadline. The CA's, who outsource their businesses generally grow rapidly than those who don't.

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SMSF Audits

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