In a recent blog I showed how a small procedural implementation difference could result in greatly different tax outcomes for the client. At the same time, I wondered how automated actuarial certificate systems would solve this dilemma appropriately. The answer (upon additional research) is worse than I expected – it will not. The systems will simply pick up whatever has been input by the administrator.
Think about the climate we are in at the moment with duty of care to clients. Consider the banking Royal Commission and the emphasis on the need to act in the client’s best interest. This is not the time to throw in the towel on administration – but it certainly is the time to review whether your services and approach are up to scratch from a proactive stance.
NetActuary can help. In past years we lead the innovation to reduce costs and turn around times on actuarial ECPI certificates. NetActuary now very clearly states that that cycle has come to an end and what is needed now involves more judgement. Bankers are going to have to assess whether they should be lending the client money. SMSF administrators are going to have to consider whether there are items they need to draw to a client’s attention.
NetActuary’s different approach entails getting involved before the end of the financial year. I thank those firms – both small and large – that have been sending past certificates and accounts to us for review. We are working through them and dividing them into three groups: those (especially legacy pensions) that need remedial attention immediately; those that have factors on an optimisation watch list; and those that look straight forward.
The issues are becoming clearer by the day. The format of the report can be for the whole year with identified segregated assets left out. There is a need to have knowledge (for admin purposes) of a client’s super outside the SMSF. The allocation of earnings to segregated and non-segregated is problematic. It looks like cash receipt allocation in accrual accounts.
The approach needed to accommodate the new ATO view has more clarity.
Please give me a call on (03) 6224 1145 if you have not yet tackled the new requirements.