The ATO has taken into account industry feedback it has received on the $30,000 threshold used as one trigger for the need to lodge an auditor contravention report (ACR) and confirmed it will not be changing this existing parameter.
The regulator has seven tests to determine whether the lodgement of an ACR for an SMSF compliance contravention is required.
To this end, Test 7 stipulates an ACR must be lodged if the total value of all contraventions is greater than $30,000. In a similar vein, Test 6 states if the total value of all compliance contraventions represents more than 5 per cent of the entire assets of the fund, then an ACR has to be recorded with the ATO.
“The $30,000 test has been in place for quite a while now. Via the auditor stakeholder group … we did have some submissions going back about two years now [that prompted] some fairly detailed analysis around the $30,000 test,” ATO director Paul Delahunty told members of the Auditors Institute during a recent presentation.
“The analysis at the time indicated to us that, in addition to the other six tests, the $30,000 test itself wasn’t triggering a significant number of specific reports.
“That said, we recognise yes it is an additional test auditors turn their minds to when they do report, and often has consequences in relation to their engagement with trustees, some additional fees are often charged in relation to ATO lodgement, and so the question around the threshold and whether it is set at the right point is a valid one to ask.”
Delahunty pointed out the threshold plays an important role in drawing attention to particular problematic compliance areas, so any amendment to it would have to take this factor into account.
“From an ATO perspective I think we’re a little bit cautious in relation to the test on the basis that it does provide a lot of visibility for us for some of the high-risk contraventions that might not be triggered by some of the other tests,” he acknowledged.
“If I look at the example around illegal early access, something that is below 5 per cent but also below the $30,000 may have an issue in relation to visibility for the ATO as to whether we see that.”
He confirmed the issue had been raised by more than one industry body, which means the regulator’s current stance on the matter is under consideration.
“So it is on our radar for some further discussion. We have reviewed it in the past and we are open to some further feedback and what options might be there in relation to that test,” he said.
