The Australian Taxation Office (ATO) will take a tougher stance on the non-lodgement of SMSF annual returns by removing funds from Super Fund Lookup.
ATO assistant commissioner for superannuation Matthew Bambrick said the regulatory body’s main concern over trustee obligations was the lodgement and time of lodgement of SMSF annual returns.
The annual return comprises the SMSF’s income tax, regulatory and member contributions reporting.
“Time of lodgement indicates how well the fund is run,” Bambrick told delegates at the inaugural Institute of Public Accountants National Congress on the Gold Coast last week.
“In order to lodge the annual return, the fund has to have been audited, so if it hasn’t been [audited], we need to wonder why and if a fund can’t manage its annual return, we begin to wonder what else it’s failing to do.
“So we’re going to be tougher with poor lodges, [whereby] all SMSFs which have two years or more of overdue lodgements will have their regulation details removed from Super Fund Lookup.”
APRA funds generally will not proceed with rollover benefits to an SMSF that has had its regulation details removed from the register.
In addition, most employers used Super Fund Lookup before making contributions to an SMSF.
“We’ll keep the regulation details off Super Fund Lookup until an SMSF’s lodgements are up to date and that will potentially affect rollovers and employer contributions,” Bambrick said.
“We’re also tightening up our processes that allow for a return not necessary, so we’ll limit those to the first income year of an SMSF’s existence only. If an SMSF hasn’t lodged in its first year and doesn’t meet lodgement in its second year, this indicates that there may not even be a SMSF operating.
“We will cancel their registration if they haven’t started operations.”
The ATO would also focus more specifically on engaging with new SMSF trustees to ensure they understood their obligations and ensure annual returns were lodged and lodged on time, he said.
Furthermore, the regulator was cracking down on whether new funds were entitled to receive their notice of compliance, he said.
“We’re also reviewing irregularities in exempt current pension income and we’re paying attention to the re-reporting of contributions and compliance with the excess contributions tax release authorities,” he said.
“We’re also going to scrutinise every fund that’s reported to us by an approved SMSF auditor and we’ll make sure those trustees are more fully aware of their obligations and ensure that contributions are dealt with.
“Further, regardless of why we review an SMSF, for example, some have been reported to us in a contravention report, we are going to look at them from a whole-of-fund perspective, so everything to do with them.”
Currently, the ATO believed trustees were attempting to comply with their obligations and were doing so successfully, he said.
“But we do find worrying numbers of trustees who have little or no idea about their obligations and who have [delegated] all of their responsibilities to their tax agent or accountant,” he said.
“I want to emphasise no matter the quality of the adviser or tax agent, trustees need to recognise that they themselves are the ones who are responsible for their fund.
“We’re also seeing smaller numbers of funds or trustees who are taking inappropriate actions without any attempt to comply, or from our perspective worse, intend not to comply, and these are the cases where we take the firmest action.”
