SMSF trustees must address their documentation requirements in light of a change to the application of the Superannuation Industry Supervision (SIS) Act introduced earlier this year, according to a specialist auditor.
Section 105 of the SIS Act, “Duty to keep reports”, is now being applied by the ATO as legislation where if breached will require to be treated as a reportable contravention.
“This can mean an $8,500 fine per trustee if they don’t keep member reports for at least 10 years,” SuperAuditors director Shelley Banton said.
The new parameters may lead SMSF trustees to question whether or not any additional documentation is now needed and the amount of documentation that will satisfy fund auditors, she said.
“The simplest way around it is to adopt the mantra, ‘If in doubt, write a minute’,” Banton explained.
“You don’t need to generate volumes of paper or be flippant about it.
“But it’s important to have a record of communication between SMSF trustees, accountants and auditors to ensure SMSFs not only run efficiently, but are also compliant.”
Banton cited certain situations that should be minuted in order to make administering an SMSF easier. These included when a fund transitions back to accumulation mode after a pension underpayment, when a related party renews an expired lease, when a personal expense is paid from the fund’s bank account, when contributions are allocated to the individual fund members, and when the work test is satisfied for a member who is over age 65 and makes contributions.
“By documenting issues as they occur, you can often put an end to dragging out fund compliance and not meeting lodgement deadlines,” she said.
“Just think about when that extra information will make the biggest difference.”