Self Managed Super Funds under the ATO Spotlight
Invention Development Advice - Tax Tips

Given the significant growth in SMSF’s over the last financial year (20% increase on the long term average), the ATO will be looking closely at the affairs of about 6,500 super funds in the coming financial year. 

The ATO’s intentions were outlined earlier this year at the SMSF Professional Association’s annual conference.  In particular the office will pay close attention to super funds that do not submit regulatory paper work on time …. "we expect every fund that is in existence to lodge their fund income tax and regulatory return, member contribution statement and pay the supervisory levy.  There will now be a greater focus, with additional resources, to action non-lodgement cases and also improve the timeliness of lodgement."

It is also worth noting that the auditing of SMSFs is about to become more onerous.  When an auditor finds a breach of the super regulatory rules they are required to tell the ATO.  Under current law the auditor must use their professional judgment and only has to report a breach if the auditor believes the breach to be 'material'. 

The ATO has been concerned for many years about the quality of work performed by SMSF auditors.  To counteract the different legal interpretations that have been happening, the law is being changed so that the ATO can be much more prescriptive on how auditors should execute their judgement. 

Auditors have been obliged to tell the tax office about Super law breaches for the last two years and an analysis of these reveals certain key contraventions that all SMSF should avoid:

  • loans made to a member or a relative
  • assets not in the name of the fund
  • breach of in-house asset rules
  • documents requested by auditor were not provided
  • borrowings by the SMSF for purpose not allowed by the legislation, and
  • breach of the sole purpose test (purpose of the fund should be retirement-related only)

So if you have a self managed super fund, or are responsible for a client’s SMSF  – be aware of this new  ‘big stick’ approach and ensure your fund/s are up-to-date and compliant with the latest regulatory changes!

 

Source: Townsends Business & Corporate Lawyers    www.townsendslaw.com.au

Reproduced with permission from the Dynamic Small Business Network www.dsbn.com.au

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