New rules mean self-managed super fund trustees need to report incomings and outgoings from their funds much more frequently once they are in pension phase.

Experts say the new rules are a sign the Australian Taxation Office will soon require SMSF asset values to be reported on a real-time basis.

It is a tough impost on trustees, who are already struggling to come to grips with the huge suite of reforms to the superannuation system starting on July 1.

From November, SMSF trustees will have to report to the ATO within 10 days if they have moved funds in or out of their fund once it is in pension phase.

"This is the first time the ATO has mandated near real-time reporting," says Kevin Bungard, the chief executive officer of Class.

From then, SMSFs will need to provide a report to the ATO about how much money is in the fund. This is part of the new requirement for super funds in pension phase to hold no more than $1.6 million in assets.

When the new reporting rules start in November, SMSF trustees will also need to report if any money has moved in or out of the fund since June 30 this year, pension payments notwithstanding.

Monthly reporting

Funds will subsequently be required to report their asset values on a monthly basis, with the expectation that this time frame will move to a 10-day reporting cycle.

"This is a big change and means trustees have to be more on top of their paperwork. They also need to more carefully plan and think through the transfer balance cap," Bungard says.

No doubt Class and its competitors will eventually be able to automate this process. But this is not yet the case as details of the raft of reforms, which also include lower concessional and non-concessional contribution caps from July 1, are still being worked out.

The November lodgment date gives trustees an extension to get their fund's tax affairs in order, recognition from the Tax Office that the SMSF industry is struggling to ensure funds comply with the new rules.

Bungard says his figures also reflect an industry under the pump: SMSF lodgment figures are down by 40 per cent. "Everyone's struggling," he says.

Brad Callaughan, a director of Callaughan Partners, notes the ATO is expanding its SMSF compliance resources. 

"But they are working with trustees who identify issues with their funds and proactively approach the ATO. They are also shifting their focus to provide assistance, education and support to SMSFs to try to stop significant non-compliance happening in the first place," he says. 

Understand obligations

Callaughan's advice to trustees is to first ensure they understand their obligations as trustees to comply with regulatory and income tax obligations. And if you do think your fund is not meeting the SMSF rules, contact the ATO.

"The ATO will take a much tougher line if you identify an issue and decide not to raise it with them," he warns.

The ATO is also taking a much closer look at SMSF schemes. It recently launched the Super Scheme Smart initiative, which aims to educate investors and advisers about the potential pitfalls of retirement planning schemes.

The Tax Office is particularly focused on schemes that exploit dividend-stripping, non-arm's length limited recourse borrowing arrangements, and personal services income.

Callaghan says as we move towards the end of the financial year, trustees should be focusing on lodging their tax returns and paying tax on time.

"Now's also the time of year to review loan agreements, if you have any. It's also important to ensure the value of in-house assets stays under 5 per cent of the fund's assets," he says.

"This can change if the value of the fund drops, which is why this one is important to watch."

But above all, says Callaughan, the idea is to ensure the ATO has no reason to knock on your door: "Don't let them come to you, go to them first."

Proper record-keeping

Greg Einfeld, director of Lime Super, says at this time of year SMSF trustees should also ensure they are keeping proper minutes and records.

"Refrain from taking any money out of the fund until conditions of release have been met. Also, ensure the fund only invests in accordance with the restrictions outlined in the superannuation legislation," Einfeld says.

"If the ATO finds an SMSF is non-compliant, then they have the power to issue a fine. They can also take further action such as disqualifying the trustees or deem the fund to be non-complying, which has significant tax consequences."  

As such, Einfeld suggests trustees resolve any issues raised by the ATO promptly and ensure any errors are not repeated.  

"Good accountants and advisers can help trustees ensure they are complying, although the onus remains on the trustees to discuss their plans before they have breached the superannuation rules," he adds.

While SMSF trustees may be struggling under the weight of reforms at the moment, Bungard says the news is not all bad.

"The positive is the new rules will instil more disciplines into SMSFs, because in the past they have not always been up to date [with their obligations]," he says.

"We're moving towards a situation where people will have a better view of their pensions, contributions and investments. This will drive a more current view, but it will be stressful to get to that point."