‘Critically important’ to include financial advisers in ATO portal: SMSFA

In its submission to the review of tax regulator secrecy exceptions consultation paper, the SMSF Association urged the government to consider creating a “designated role” to sit alongside the primary tax agent who could access information necessary for the administration of SMSFs.

Crucially, it said this role should be separate and distinct so as not to interfere with the primary tax agent relationship.

“Given the nature of the information to be provided, access should only be permitted where the role is authorised by the individual taxpayer,” it stated.

“Access should be limited to accessing information only. All other rights, such as the changing of a taxpayer’s personal details or the lodgement of individual returns or forms would remain the role of the primary tax agent.”

SMSFA CEO Peter Burgess said the need to include advisers in this process is “critically important” and hopefully this opens a pathway for advisers to have access to ATO client information.

Burgess said the association’s submission expresses a firmly held view that there is a strong case for change to give advisers this access.

“Financial advice must consider the totality of a client’s circumstances, and this requires access to personal client data and information, including key ATO-held information,” he said.

“Superannuation rules are complex and getting it wrong can be costly so it is vitally important advisers have access to the information they need to provide accurate and timely advice to clients.”

Burgess added the submission also addresses SMSF administrators – another important group that plays a critical role in helping clients, among other things, to avoid inadvertent and costly superannuation cap breaches.

“SMSF administrators who are registered tax agents offer specialist SMSF accounting and tax services to SMSF trustees, and as registered tax agents they have access to the ATO online services for the SMSFs they administer,” he said.

“However, crucial information relating to a fund member is not accessible, being limited to the individual member’s tax agent.”

The association noted in its submission that providing access to client data has been a significant barrier for financial advisers in providing essential tax and superannuation advice to their clients.

“Many of the issues arising for financial advisers mirror many of those experienced by registered tax agents providing specialist administration services to SMSFs. Due to the specialist nature of SMSFs, it is not uncommon for a different tax agent or administrator to attend to the SMSF’s taxation and accounting services, to the tax agent who looks after the individual’s personal taxation matters,” the submission stated.

It continued that although SMSF administrators are registered tax agents with existing rights to access the ATO’s online services, that access is strictly limited to the SMSF only and does not extend to the fund members.

“Yet member information, crucial to the performance of their role, and the services provided in relation to the SMSF are not accessible. That is despite their registered tax agent status,” it stated.

“Examples of information required but not accessible includes an ability to view an individual’s transfer balance account, despite having the responsibility to report events impacting that account and managing pension interests.”

Other examples of critical data include information regarding contribution caps and thresholds, such as the unused concessional contributions and status of non-concessional contribution bring forward caps and total superannuation balances.

Furthermore, the association stated that access to this data by SMSF administrators is important for many reasons. For example, it would enable the early detection of reporting errors and would greatly assist SMSF administrators to provide SMSF members with more accurate and complete information about their superannuation tax affairs.

“Adding to the complexity, any ATO correspondence relating to the client’s SMSF interest are directed to the individual’s tax agent and are not visible to, or accessible by the SMSF administrator. That is despite that correspondence relating to the taxpayer’s interest in the SMSF,” it added.

“There can often be a need for the specialist firm to be involved to support and assist that individual to take the necessary steps required in response to certain notices.”

The Joint Associations Working Group (JAWG), of which the SMSFA is a member, also said it is “strongly supportive of providing access to the ATO portal for financial advisers”, adding that there are significant benefits for both advisers and their clients.

Core to JAWG and its members’ argument is that access to the ATO portal would allow the more accurate and efficient use of client data.

“When a financial adviser is working with a client to provide them with advice, including with respect to retirement, they need to do a complete fact find exercise to discover all the financial, tax, social security and family information that is relevant to that client,” the submission said.

“Understanding taxable income and the sources of that income is critically important. Superannuation is typically the largest financial asset people have, so understanding what accounts they have, how much they have and what contributions have previously been made is essential.

“Since the introduction of the Transfer Balance Cap and Total Superannuation Balance measures, knowledge of this information is absolutely critical to avoid the risk of providing inappropriate advice. Obtaining this information can be particularly challenging for clients and advisers, resulting in a material cost to each.”