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ATO SMSF questions are compliance not research

Australian Taxation Office (ATO) questions about the legitimacy of an SMSF during set-up phase are purely for compliance purposes and not for public use, according to the regulator.

ATO assistant deputy commissioner Stuart Forsyth stressed that fact to delegates at the inaugural Institute of Public Accountants National Congress last week when asked why the findings from that line of questioning were not made available to financial advisers to help streamline their fact finds during the procedures in establishing an SMSF.

“That’s not conducted as research, it’s conducted as compliance action,” Forsyth said.

“A number of those funds have never registered because what happens is we get told things like: ‘I’m not going to use my fund because I’ve got presents on lay-by for Christmas and I need the money.’ So we don’t allow that fund to register.

“It’s not conducted as research as such and the work has been, we think, fairly effective in terms of addressing some of the people who get into this [the SMSF] sector without thinking through why they’re there.

“We have not conducted, for a number of years now, any research on when we bring in new trustees. What we do is tend to ring new trustees in the first few weeks to talk to them about their fund and whether they’re planning to run a fund or planning to take early access of their benefits, and that can be quite a difficult conversation as you can imagine.”

He said if the fund had passed the ATO compliance procedures, the financial adviser should regard that as a positive sign their clients were suitable to be SMSF trustees.

“Some hundreds of funds have not proceeded as a result of those questions. So if your clients are all getting through that process, that’s great. Some people aren’t,” he said.

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