News in brief

Jump in SAN misuse

Responses to the ATO’s most recent mail-out asking auditors to check the veracity of information contained on fund annual returns have shown instances of SMSF auditor number (SAN) misuse increased in the 2021 financial year.

The regulator undertook the latest mail-out in September last year, with the exercise indicating the issue had worsened in the previous income year.

“We detected more SAN misuse than in previous mail-outs, with more than a third of instances of SAN misuse relating to SARs (SMSF annual returns) that were lodged late,” the ATO said on its website.

Specifically, the information gleaned from the September 2021 mail-out uncovered 1896 instances of SAN misuse, with 65 per cent, or 1230 instances, relating to SARs for the year ended 30 June 2020 and a further 25 per cent, or 481 cases, pertaining to SARs for the 2021 income year. Further, the exercise found the SAN misuse was associated with 683 tax agents and 24 trustees who lodged a fund’s annual return themselves.

Statistics uncovered a significant amount of service providers had committed multiple offences, with 50 tax agents found to have been connected to more than five instances of SAN misuse involving 812 funds. In addition, it was discovered 411 tax agents were connected with one instance of SAN misuse.

Minimum pension cut popular

A poll of financial advisers and accountants has shown the financial relief measure reducing the minimum pension requirements by 50 per cent for the 2020, 2021 and 2022 financial years, extended now to include the 2023 income year, has resonated well among retirees.

The survey, conducted by Accurium at a recent webinar, showed 74 per cent of the attendees indicated their clients have reduced the amount they are drawing down from their income streams as a result of the relief measure.

A further 18 per cent of practitioners revealed their clients had taken advantage of the measure but had not actually reduced the amount they are drawing down from their pensions. Instead, they have treated any income stream payment amounts above the required minimum pension as a partial commutation to enjoy a transfer balance cap benefit.

Finally, only 8 per cent of participants said their clients had continued to draw the same level of pension as before the measure was introduced.

SuperStream list updated

The ATO has updated its register of SMSF messaging service providers that can facilitate transactions via the use of SuperStream by giving their users an electronic service address, with only 15 available options now for trustees.

When last revised in November 2021 the list contained 16 service providers, however, original participant SMSF Dataflow is now no longer included.

Further, in November Australia Post was classified as a work in progress due to the fact it was only able to process contributions via SuperStream at the time. SMSF trustees can now use Australia Post for both contributions and fund rollovers.

No other noticeable changes to the register have been made.

The regulator reiterated the purpose of providing the register as part of the update.

“We do not recommend or endorse any of the listed SMSF messaging service providers. We are providing this register for your information, subject to terms and conditions,” the ATO said on its website.

Perfection not expected

The Australian Securities and Investments Commission (ASIC) is not expecting financial advisers to hold perfect compliance files and recognises the current state of regulation is too complex and prescriptive.

ASIC chair Joseph Longo made the comments during a question and answer session at the Stockbrokers and Investment Advisers Association (SIAA) 2022 Conference held in Sydney recently.

Joseph Longo

When asked whether advice professionals should be concerned about ASIC looking for a perfect compliance file, Longo replied: “I’ve been in financial services most of my life, I don’t go for perfection.”

He noted the corporate regulator recognised financial advice legislation was complex and prescriptive as a result of many cases of poor advice leading to a wave of re-regulation going through the sector.

“We’ve now reached a point where it’s time to implement and make work what we’ve got,” he said.

“We can all agree on what we wanted to achieve, and we wanted consumers to trust the system and for advisers to act in the best interest of their clients.”