Accounting v's SMSF Software

For those who have a SMSF you may not realise it but there are heaps of compliance and other traps if your accountant uses accounting software rather than SMSF specific software.

How can you tell ?? Hmmm its hard but lets looks at some of the features of good software so you can self assess whether you need to "have a chat" about the past mistakes that might cost you a lot later. Might be time to see an adviser that uses modern tools.

SMSF Software will

• Produce member statements that show annual movements plus preservation elements, the eligible service period date and also the taxed and untaxed elements. Dont see that detail ?? Get worried.
• Automatically handle calculations. Reduces human input and therefore reduces costs
• Produce a CGT report and track cost, market values and also unrealised gains. No calcs needed.
• Automatically integrate with banks accounts, share registries and platforms. Data entry ? Minimal. Teaching the software to recognise each transaction is the key issue
• Produce very detailed investment and investment income reports and much more
• Produce loads of compliance docs and track things such as unused caps etc
• Most likely the adviser will have asked you for authority to access bank data feed etc.A simple but cost effective process..

Accounting Software will

• Not produce compliant reports other than "financials". But they will be lacking
• Not track investments. Again - all manual calcs etc
• Require substantial human input. = High cost. Almost everything needs to be manually done.
• Even the tax return is a largely manual job.

I have provided a sample copy of a complex fund to demonstrate what SMSF software reports should look like

 

We use BGL 360. Used to use class but ended up being quite expensive.

The new Ai tool from BGL looks quite good.

I thought most accountants doing smsf financials and returns are using either BGL or Class which do all those functions. But to be fair thats only the firms ive had dealings with

 

Everything about BGL is good. One of the smartest companies in software and its Melbourne based.

Every other week they bring out new features. I cant say enough good things about BGL Simple Fund 360 and CAS 360 (ASIC compliance). Told Ron Lesh other week that the cost is trival v's what it helps us save in time.

My new wishlist is that the data file is easily transported between firms and is a client "right". One of the issues with cloud is there needs to be file transfer capabilities and its really evident in super. It really bugs me when a former accountant refuses to hand over the client file THEY PAID FOR. Almost unprofessional IMO.

Yeah the new Ai that sits behind it is damned clever. It even detects variances in expected income and tests for witholding or no TFN and posts that. Now its also checking to registry if you enter HIN details...so many hidden things it does.

 

+1 for BGL SF360. Reasonably intuitive even for non-accountants. Costs about $200 a year.

 

There are a significant number of things DIYers can get wrong in the belief of simplicity however

- Tax elements in income eg calling a ETF a share and not correctly allocating income elements eg tax deferred etc
- Incorrect investment setup (One annoying feature is setup of shares by default when ETFs and listed trusts should be nominated). Other is rental expenses - BGLs chart doesnt allow for property depn and cap allowances.
- Corporate actions and similar items. eg return of capital, depreciation and similar. Sometimes best not to use GBL corp actions.
- Compliance issues based on experience eg pension resets, minimums, nominations etc
- Actuarial cert / tax return prep and tax calcs. Are these in the trustee version ?

I have had mixed results with clients using BGL themselves. Some its an almost perfect job and others - Costs more to fix esp after they have allocated CGT sales.

 

I've seen financials done in APS/XPA lol...

 

And excel - Groan.

I no longer accept any such efforts. Like a more modern version of a shoebox

 

And if you are not using specialised software going to be extremely difficult to meet your obligations as trustee regarding transfer balance account reporting (TBAR). Seperate forms to the income tax return and for many people 28 days after the quarter the event occurs.

 

I never trust anyone that waxes lyrical about excel or fax machines.