CGT Relief Advice To Cost Clients Thousands, Says Lawyer

Due to the complex nature of the transitional CGT relief and the fact it requires four different areas of expertise, clients in some cases are paying substantial fees to receive proper advice, says an industry lawyer.

Speaking to SMSF Adviser, DBA Lawyers director Daniel Butler said providing an SMSF client with appropriate advice on the CGT relief requires a deep knowledge of tax, superannuation and actuarial calculations and the adviser must also be covered under an AFSL.

“Advisers are in a very difficult position because not everybody has that sort of skill set and this is a really complex area,” he said.

“Even for a very skilled, superannuation expert, it is highly complex work, and therefore advisers really should be making sure that they're doing everything properly.”

This is further complicated by the fact that not all SMSF firms have adequate software that performs these sorts of calculations and stores relevant information about assets, he said.

“If you don't have a computer system that does it for you, then you have to pull out of the cost base records and establish the cost base,” he said.

“Consider a tranche of shares, for example, there may have been corporate reconstructions, mergers, acquisitions, bonus issues, you could have had dividend reinvestment so it’s a hell of a lot of work to really get down into all the detail in order to establish the cost base, unless you’ve got a system that already has all of that work programmed into it.”

These advisers, he said, therefore have to go back and do substantial ground work to get source documents to be in a position to advise their client what their options are.

“So it’s going to cost the average client a few thousand dollars to get attention in this highly complex area, thanks to the complexity of this legislation,” he said.

“I don't think the government envisaged how complex and how costly it would be to administer in practice, in fact, they probably thought they were doing a favour to the industry by providing a CGT reset. It is a welcome gift, we're not saying we're ungrateful but what we are ungrateful about is the complexities added to the system that should have been a lot simpler, to administer.”

By Miranda Brownlee

SMSF Adviser

20 November 2017

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