In this episode of the SMSF Experts Podcast, Shelley chats with Sean Johnson, SMSF specialist at Heffron, to tackle one of the industry’s most pressing challenges: how to process underpaid pensions through SMSF software following the ATO’s June 2024 changes to TR 2013/5.
With software companies unable to update their systems for the new rules, Sean reveals a three-step processing solution that SMSF practitioners need to navigate.
Sean explains why the rule changes have created a new software paradigm, requiring practitioners to process funds several times to accommodate the competing requirements of tax law, SIS law, and contractual obligations. From calculating ECPI values to managing TBAR entries and tax component adjustments, this episode provides a step-by-step framework for managing underpaid pensions through SMSF administration software.
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CONTENT:
(02:00) June 2024: The ATO Updates TR 2013/5
(04:00) Old versus New Rules – Why Pension Failures Now Occur Over Multiple Years
(08:00) The Tax vs SIS Law Issue – Conflicting Legal Frameworks
(10:00) The Key Challenge for SMSF Software Providers
(12:00) Timeline of Reporting Requirements: What to Expect and When
(16:00) The TBAR Dilemma
(20:00) Why Prevention is Better Than Cure – The Importance of Data Feeds
(24:00) Post-Balance Date Action Plan – Acting Quickly After 30 June
(27:00) Member Account Strategies – The Resurgence of Multiple Pensions
(30:00) The Three-Step Processing Framework
(32:00) Processing Step One – Calculating TBAR Values & ECPI
(34:00) Processing Step Two – Securing the Pro-Rata Minimum Values
(37:00) Processing Step Three – Managing Accumulation Accounts and Tax Components
(40:00) Handover Challenges – What Happens When Clients Switch Administrators
(42:00) Financial Advice Considerations – The Difference Between Compliance and Advice
(43:00) Audit Considerations – Comparing Account-Based Pensions and Accumulation TRIS
(46:00) Estate Planning Effects – When Failures Compromise Tax Strategies
Want more on this topic? Episode 25 of The SMSF Experts has you covered as Shelley discusses the “Pitfalls of Underpaying a Pension” with Peter Crump, Senior Consultant, Private Wealth, BDO Australia.
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