The Australian Taxation Office (ATO) has expressed its concern as to whether individuals are establishing their SMSFs for the right reasons and uses.
Speaking at a recent SMSF Professionals’ Association of Australia Sydney Chapter breakfast, ATO self-managed super funds assistant commissioner Matthew Bambrick said the constant breaching of the sole purpose test, the in-house asset rule, borrowing rules and restrictions regarding loans to members was sending the regulator a less-than-positive message.
“What that shows to us is there’s clearly a common misconception about what you can do with an SMSF,” Bambrick said.
“The concern for me as a regulator is that more and more people will set up an SMSF who aren’t quite aware of why and what it is for.”
He said the ATO had observed the situation from its deliberate efforts to stop the illegal early-access schemes that plagued the sector a few years ago.
“One of the ways we addressed that was to risk assess every fund that wants to register as an SMSF,” he said.
“The applications considered to be higher risk get a phone call from us, so we phone the trustees and ask them why they are setting up the fund. You’d be surprised at some of the answers we get to that.
“They range from ‘I don’t know, my accountant told me to do it’, and a surprising number of people actually say they did it in order to access their super benefits.
“It does say to me that certain people have no idea why they are getting into it and that worries me. I think that’s a risk.”
He also confirmed the ATO would review all the auditor contravention reports it received during the 2014 financial year and would conduct full audits on those funds categorised as high risk during that process.
