JP Morgan Treasury and Securities Services has established a new role for the development of its taxation data services, as the ongoing consolidation in the superannaution fund industry has given more weight to tax decisions.
"What we are seeing with our large super fund clients - and they are getting larger, of course, with all the merger activity happening in the sector - is that they are saying: 'We are now some of the largest taxpayers in the Australian market,' and as a result of that they get special treatment from the tax office," JP Morgan Treasury and Securities Services sales and client relationship managing director Bryan Gray said.
The special treatment consists of higher scrutiny by the Australian Taxation Office (ATO).
"They are really keen for us to expand the sorts of things that we do in the tax area for them because it is becoming such a critical area," Gray said.
In response, JP Morgan created the new role of taxation product executive and appointed JP Morgan executive director Lucia Uen to the position earlier this year.
"We brought Lucia in to oversee what our tax product should look like and help us develop and expand that for our clients," Gray said.
"Our clients are really focusing on the impact of investment activity on tax and after-tax returns, so [we now have] someone who can help focus on what we need to be doing as an organisation to deliver information to our clients that will allow them to make better tax decisions.
"We are not going to provide tax advice, but what we do is make sure that we provide them with information that will help them and their tax advisers to produce better results."
Uen said the increased scrutiny by the ATO had resulted in higher demands from clients on accurate and timely taxation data.
"As the keeper of their books, they rely on us to provide accurate information so that they can report the correct tax," she said.
But apart from accurate data, she said she also expected opportunities for the company in the way it provided data to its clients.
"I think there is a lot of value to be added in ways that you can cut information so that you can provide valuable information for our clients to make decisions upon," she said.
"As a custodian, we have valuable data on our clients, all of their transactions, all of their asset values, and it is a matter of how we can design reporting or cut up the information so that clients can make investment decisions and enhancing their after-tax performance, or helping them with their performance benchmarking."
The Cooper review has also placed a greater emphasis on after-tax reporting, which has been further stimulated by the Association of Superannuation Funds of Australia.
"If they are going to be assessed on their after-tax values, they need to ensure that their investment decisions are made with tax in mind," Uen said.
"We talk to our clients on how we can help them make those decisions. Clearly at the moment people are looking at tax parcel selection, optimising their capital gains tax decision, and obviously we want to give them enough data that the fund managers can make their trading decisions off: the history of the parcels, franking credits and entitlements."
JP Morgan Australia expects to spend $70 million on technology initiatives that will improve the provision of data to its clients over the next three years, while globally JP Morgan is spending $650 million to enhance its data provision technology.
The development of new ways to deliver taxation data will be funded out of this budget.
