ATO Assistant Commissioner releases “report card” on SMSF sector
The Tax Office is currently homing in on a few problem areas when it comes to the SMSF sector by:
- engaging with new trustees to ensure they can operate their SMSF and are not seeking illegal early access to their retirement benefits
- ensuring annual returns are lodged, and on time
- focusing on new funds and whether they are entitled to receive their notice of compliance
- reviewing irregularities in exempt current pension income and non-arm’s length transactions
- looking at the re-reporting of contributions and compliance with excess contributions tax release authorities, and
- looking more closely at every fund reported by approved SMSF auditors to make sure those trustees are more fully aware of their obligations and that contraventions are dealt with appropriately.
On that last matter, Assistant Commissioner for Superannuation, Matthew Bambrick, said a drop in the proportion of SMSFs that were reported to the Tax Office by approved auditors had set off alarm bells.
“We’d like to think this is because the levels of understanding and compliance in the sector have improved, but it may also simply be due to a time lag with data and we’ll get an increase later, or it could be that there has been a decrease in the effectiveness of SMSF audits,” Bambrick said.
Bambrick outlined other problem areas that seem to affect a small minority of SMSFs:
- inept calculating of exempt current pension income, especially with carry forward losses and apportioning of expenses
- incorrect reporting of non-arm’s length income
- related party transaction breaches
- tax avoidance, like claiming holiday travel as investment expenses
- lack of independence where some SMSF auditors audit their own or their relatives’ funds
- poor quality audit documentation and auditor knowledge, and
- failure to lodge.
Consult this office for advice on how to comply with all your SMSF obligations and responsibilities.