New labels in the 2019 SMSF annual return signals ATO’s risk profiling of trustees
The SMSF annual return for 2019 has a number of new questions and labels that SMSF trustees need to be aware of.
In previous years, the ATO advised trustees that the question in the annual return regarding whether Part B of the audit report was qualified could be answered with a “no” if the only reason the auditor qualified Part B was because they could not confirm the information provided to them (for example, opening account balances).
The ATO advice for this year is that this is no longer the case, and that trustees’ answers must correctly convey the auditor’s written opinion.
The 2019 SMSF annual return will also need confirmation that Part A of an audit report is qualified. Part B of the auditor’s report gives the auditor’s opinion on the fund’s compliance with super laws and Part A of the report gives the auditor’s opinion on whether the fund’s financial statements are fairly presented (that is, there are no material misstatements).
Trustees are now required to answer “yes” if the audit report was qualified at Part A and/or Part B, regardless of the auditor’s reasons for the qualification.
The ATO says the change is designed to give it more information to help it build a more complete risk profile of the SMSF population. “This information is only one of the factors we would take into account in making a risk assessment of the fund,” the ATO says. “We would not generally raise a fund audit or review a case based solely on a qualification of Part A of the auditor’s report.”
The ATO says that if a trustee receives a qualified audit report from their auditor, its advice is to rectify any issues if possible and/or make a voluntary disclosure. “If we do commence an audit, we will take your disclosure into account in determining any enforcement action and the appropriate level of remission of administrative penalties,” it says.
Other SMSF annual return changes
LRBA amounts: A new label has also been added to the Member section of the return in order to allow the trustee to report outstanding LRBA amounts for each member — which the ATO says will be used for statistical purposes only.
“You should report the outstanding loan balances for all LRBAs, and not just those that would have been caught by the proposed changes for total superannuation balance purposes,” it says. “The reported amounts will not be used in calculations of a member’s total superannuation balance.”
The ATO says it will accept any reasonable method in calculating these amounts, however suggests one methodology in particular as it aligns with proposed changes under subsection 307-231(3) of Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018 (see under schedule 4 of the above, under “307-231 Limited recourse borrowing arrangements”).
Cryptocurrency: In the Assets section of the return, cryptocurrencies (which were previously reported at the “Other overseas assets” label) now have a dedicated label. And although bitcoin is the commonly recognised asset in this case, other digital assets that have the same characteristics should be included. (These charactertistics are set out in TR 2014/25.)
Downsizer contributions: The Member section now also has provision to report downsizer contributions. The total value of all downsizer contributions made by the member in 2018-19 will be reported at the “Proceeds from primary residence disposal” label and the date the downsizer contribution was received by the fund will be reported at the receipt date label.