If 2020 was a lesson in anything, it was to expect the unexpected. Who could have predicted a year of such unprecedented worldwide disruption?
As a part of the new Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2020 there will be 2 law changes taking effect on February 18 2021.
From 18 February 2021, companies will no longer be able to cease the last remaining director on ASIC records.
To enforce this, lodgements submitted using a Form 484 Change to company details, or Form 370 Notification by officeholder of resignation or retirement, to cease the last appointed director without replacing that appointment will be rejected.
There are some exceptions to this, including if:
CAS 360 already had a block on resigning the last remaining director via a form 484, a similar block will be added to the form 370.
We will also add new messaging alerting the users when they are trying to cease the last remaining director.
There are significant changes for late lodgements of director cessations.
From February 18 2021, if a director’s cessation date is notified to ASIC more than 28 days after the effective date then the effective date will be overridden and replaced with the lodgement date. Late fees still apply to the Change of company details form in this scenario.
Example
John Smith is a director of ABC Industries Pty Ltd.
John Smith resigns as a director on 1 April 2020; however, the Form 484 is lodged to ASIC on 1 November 2020.
On ASIC’s records, the resignation date will be 1 November 2020. The standard late fees will still apply.
When lodging a document in CAS 360 that is going to receive a late fee.
CAS 360 will always alert you. A new warning will now appear of officer cessation transactions that are later that 28 days to advise the user that the cessation date will be replaced with the lodgement date.
This has been a tumultuous year for BGL, our clients and the superannuation industry.
During the year, the government introduced another super early release scheme – this time in response to COVID-19.
I have asked our friends at mProjections to do a couple of calculations to demonstrate the impact of a withdrawal and how to engineer a higher retirement. Please check these out.
Example 1
Phillippa, 29, worked in the hospitality industry with 2 jobs, total income (pre Covid) of around $55,000pa, pre-tax. She is single and had built up a Super balance of $25,000.
Shortly after loosing one of those jobs, she withdrew $8,000 without thinking about the consequences to super. Her Super had been invested in a typical ‘Balanced’ Investment Option with 65% in growth assets.
Using the mProjections Report, Philippa moved her post-withdrawal balance to a High Growth Investment Option (85% in growth assets). She saw that, before withdrawal, she would have $55,194 pa annual retirement income for 25 years, but with a move to High-Growth – without additional contributions – she would enjoy a $57,415 projection. Most importantly, her upside for a considerable improvement in retirement spending would increase.
Example 2
Jonathan works as an electrician in the western suburbs of Sydney and had his hours reduced to 20 hours per week for 3 months. He decided to withdraw $8,500. Using figures in our Report, he saw how to increase his $79,747 tax-free pre-withdrawal retirement projection by moving the balance of his fund to a High Growth Investment Option and a consequent retirement income projection of $82,442.
He also noted the greater likelihood of upside. ‘Low’ here is 15% of assets in growth.
If you would like to prepare an mProjections report for your clients, check out their website.
“It’s great to see a proper analysis of SMSF cost and return data” said BGL’s Managing Director, Ron Lesh. “And knowing the vast majority of the data came from BGL’s Simple Fund 360 clients makes me even more proud.”
“The report shows the cost of running an SMSF highlighting that larger balance SMSFs cost less to operate than any other type of superannuation fund or account” noted Lesh. “And for smaller balances, SMSFs are comparable with APRA regulated funds”
The report data was sourced from BGL’s Simple Fund 360 and Super Concepts SuperMate software. “It is great to see 2 industry software companies working with Rice Warner to provide the data required to prepare the report at no cost to the SMSFA” added Lesh. “It is unfortunate that not all industry software companies chose to participate”.
“The other data I also found fascinating was the table on Page 21 of the Report showing investment returns for the last 14 years “says Lesh. “From 2005 to 2018, for 9 of the 14 years returns shown in the table, SMSFs performed better than APRA regulated funds”
“Clearly this shows ASIC’s SMSFs are not for everyone flyer was absolute rubbish” stated Lesh. “I said this flyer was misleading and did not fairly represent the cost of running an SMSF. The Rice Warner report validates my statements and furthermore shows that SMSFs with a balance of less than $500,000 are clearly cost competitive with APRA funds dispelling statements made in the December 2018 Productivity Commission report”
Published by SMSF Adviser, powered by MOMENTUM MEDIA
Written by Miranda Brownlee on 19 November 2020
BGL managing director Ron Lesh said the proposal to require SMSFs to prepare their financial statements 45 days before their lodgement date makes no sense and could lead to increased instances of backdating.
“I am trying to understand why this is necessary or where this has come from. It will not improve SMSF reporting, it will not improve SMSF audits, it will not improve SMSF annual return lodgements — so why has it been proposed?” Mr Lesh said.
“In fact, in my view, it could do the opposite. It could put SMSF trustees in a position where they need to backdate accounts — for no reason or benefit.”
Mr Lesh said the SMSF industry has made it clear that the change is unnecessary and that it will simply be an additional burden on SMSF trustees, administrators and auditors.
“I thought post-COVID-19 we were trying to cut unnecessary red tape rather than add more regulations to an already incredibly overregulated industry,” Mr Lesh continued.
“I hope Treasury is listening. A clear statement from Treasury or the government that this change will be dropped is needed now before it causes more angst in the SMSF industry that has already suffered through a year of extreme stress.”
BGL is one of the latest firms to slam the measure, with the accounting bodies and associations such as The Tax Institute and the SMSF Association all expressing concern about the proposed reporting requirement.
“The proposed amendment will achieve nothing beyond forcing the preparation of SMSF accounts into a tighter time frame which will place additional pressure on accountants and those assisting SMSFs in the preparation of their accounts,” The Tax Institute said in its submission.
“Around 99 per cent of SMSFs use a tax agent to lodge their annual return, and tax agents cannot afford to lose 45 days out of their schedule to prepare SMSF accounts earlier in order to meet the proposed requirement.”
“It’s just dumb” said BGL’s Managing Director, Ron Lesh. “Why do SMSFs need to prepare their financial statements 45 days before their lodgement date? It just makes no sense”
In a draft amendment to the The Treasury Laws Amendment (Miscellaneous and Technical Amendments) Regulations 2020 it is proposed to insert a new regulation 8.02AA into the Superannuation Industry (Supervision) Regulations 1994 to require accounts and statements for SMSFs to be prepared at least 45 days before the annual return is required to be lodged.
“I am trying to understand why this is necessary or where this has come from” asked Lesh. “It will not improve SMSF reporting, it will not improve SMSF audits, it will not improve SMSF annual return lodgements – so why has it been proposed?”
“In fact, in my view it could do the opposite. It could put SMSF trustees in a position where they need to backdate accounts – for no reason or benefit” noted Lesh.
“The SMSF industry has clearly said this change is unnecessary and that it would simply be an additional burden on SMSF trustees, administrators and auditors” says Lesh. “I thought post COVID-19 we were trying to cut unnecessary red tape rather than add more regulations to an already incredibly over-regulated industry.”
“I hope Treasury is listening” stated Lesh. “I do not know who came up with this dumb idea, but one would suspect it was someone who has no experience in the real world. A clear statement from Treasury or the Government this change will be dropped is needed now before it causes more angst in the SMSF industry that has already suffered through a year of extreme stress.”
BGL has been rated by accountants as Australia’s #1 SMSF software provider in the 2020 Investment Trends Report.
BGL has been recognised for Australia’s Best Customer Service in the category of computer systems, software and internet services in the 2020 Australian Achiever Awards.
I hope this was as a result of lobbying by the accounting bodies.
When I last spoke to the ATO, I was told the accounting bodies supported the ATO position of asking each tax agent to apply for extensions. What changed their minds ?
I called out the previous ATO position as stupid.
It is nice to see the ATO eventually agreed!
In a matter of weeks, we adapted our software to meet our clients’ changing needs and improve their experience; implemented innovative ways to keep our teams connected and productive; and sought out ways to help the community. Now, we want to share what we’ve learned so far in hopes that it might help you during this transition. Here are some tips from the BGL team to help you nail WFH:
Everyone has their own way of planning their time, however, one great tip is to get into the habit of writing your to-do list for the day and week ahead. Also, consider your most difficult tasks and try to get them out of the way as early as possible to avoid procrastination. Using Project Management platforms such as Jira, Asana, Monday.com can be quite helpful.
Since you’re no longer close to your co-workers or manager, it’s good to schedule 1:1 check-in meetings with them on a weekly basis to chat about your goals, upcoming projects and daily tasks. Use this time to clarify any concerns or questions you might have, plus inform about achievements and future tasks. Using communication, video conferencing platforms such as Slack, Skype, Zoom or GoTo can be quite helpful.
Your morning prep routine – People often joke that they would love to work in their pyjamas but, in reality, getting dressed as if you are heading to the office can help put you in ‘work mode’. It also ensures you look professional in all video meetings. The same mindset applies for a proper workstation set up, it can help you stay focused on activities while WFH, so make sure you have one!
To feel supported and stay connected to the “real world”, become part of a remote community. We’ve found that being surrounded by others who are successfully working remotely inspires us to remain productive while embracing the flexibility. Plus, human interaction can make all the difference in your productivity as well as your mental and emotional well-being. Participate in Facebook Groups, Slack Channels, attend online events and other community initiatives 🙂
Automate processes as much as you can. Take advantage of the perks of using cloud-based apps for greater collaboration when working remotely: Cloud computing has made it incredibly easy for workers in a company to collaborate and being able to keep providing the same service level to clients! At BGL, we use a number of cloud applications and that is allowing us to keep providing next level service to clients and collaboration between teams. Make sure you and your team have the right resources in place and are making the most out of it.
Working from home can be a big transition. You might feel any combination of lonely, isolated, stressed, frustrated, anxious, unmotivated, or — on the other hand — relieved, relaxed, energised, or productive. It’s all OK and normal. Take it easy on yourself and make sure you remain positive!
If you want to find out more about BGL’s updates, click here.
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