In a speech given to a national SMSF conference, ATO deputy commissioner for superannuation James O’Halloran admitted that the government’s budget superannuation changes, even though these are yet to pass Parliament, are already having a significant impact on the ATO’s capacity to cope.
“We have already seen some examples of these increased expectations emerging with respect to the announcement of the $500,000 lifetime cap for non-concessional contributions,” O’Halloran said.
“Since the announcement on budget night we have received an increase in enquiries either from individuals or tax professionals on behalf of their clients for calculations of non-concessional contributions. To date we have received some 8,000 phone calls or written requests which, while a relatively small number given some nine million calls to the ATO annually, is a spike in interest which is likely to continue.”
O’Halloran indicated that the ATO is likely to need to significantly increase resources in order to cope with the spike in requests for information — in spite of the fact that the reforms are not yet passed.
The proposed measures, as currently presented, “will require the Commissioner to provide as much ‘early certainty’ to the superannuation industry as to how we will apply the law in our role as administrator for SMSFs”, O’Halloran said.
He also indicated that the ATO will need to significantly ramp-up its investment in resources to be able to deal adequately with the huge SMSF trustee community, as well as the advisers servicing the sector. It was also evident the ATO will need to move to service and monitor account balances and provide accurate information to stakeholders.
“It is clear that emerging administrative design principles for us will include a recognition and understanding of the expectations of early advice and ideally improved visibility on superannuation information and advice from which people can make informed decisions and ensure they can comply with any legislative changes or consequences for their individual investment decisions,” he said.
“We do also recognise that advisers and clients will expect to be able to see in as timely way as possible how they are tracking towards the range of ‘caps’ and timing issues which may impact on their ability to access various concessions and to avoid excess contribution penalties.”
Based on 2015-16 data, O’Halloran revealed that there are now about 600,000 SMSFs and slightly more than 1 million members. “Therefore the importance of SMSF professionals cannot be underestimated,” he said. “The number of funds is growing rapidly and as an example we receive about 2,500 new registration applications each month.”