We made the 2022 AFR BOSS Best Places to Work list! Click here to learn more

SuperStream is making accountants fall short

As of 1 October 2021, all SMSFs are now required to process all rollover requests by the SuperStream rollover standards.  In broad terms these standards require trustees to receive requests electronically, validate member details, use ATO’s electronic services to verify fund and member information, and complete rollovers within three business days.

Very few accountants keep their SMSF accounts up to date. For most accountants is an annual process often completed after many of their tax clients are completed first.  While new software such as class and simple fund 360 allow for automatic data feeds, manual intervention is still required to reconcile accounts.

What are the challenges for Superstream rollovers?

Should you receive a rollover request from an APRA regulated fund here are some of the issues that need to be addressed:

  • How up to date are the financials?
  • Are the member’s tax and preserved components accurate? this usually requires some interim accounts to be prepared to allocate income equitably across the members
  • Many APRA regulated funds only accept cash, so this may require time to liquidate the fund’s assets either selling down or redeeming investments.
  • What do you do if the fund holds unlisted investments or property that may take more than 3 days to sell?
  • In marriage breakdowns this may be used as leverage, especially if the fund owns business real property asset leased to a member.
Auditor are policing the changes

If this new obligation was not onerous enough, the ATO is requiring SMSF auditors to police compliance with SISR 6.5 as part of the annual audit.  For all rollovers made after 1 October 2021 auditors must obtain evidence confirming the SMSF received the rollover request. Auditors must also confirm the rollover was made via Superstream and the rollover occurred no later than three business days after receiving all the information to process the request.

Failure to comply will incur and automatic qualification and Auditors Contravention Notice (if over reporting threshold). The fund could also incur 20 administration penalties points up to $4,400 per trustee.

What can you do to ensure you comply?

Firstly, it’s important to communicate this issue with the trustees and allow sufficient time to get the accounts up to date and investments sold.  It’s the trustees who get fined, so its in their best interests to be proactive.

Secondly many accountants are reconciling their SMSFs quarterly instead of an annual processing.  With quarterly processing the fund’s information is more up to date and you have a better chance to process with timelines.

Related News