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ATO preparing better reporting guidelines

The ATO has revealed it expects to soon release new guidelines for the reporting of serious SMSF contraventions in order to avoid fund non-compliance.

“We prefer people to come to the ATO and we’ve had requests for us to actually put out some guidelines and explain what applies,” ATO SMSF risks and products director Nathan Burgess told the Self-Managed Independent Superannuation Funds Association SMSF Forum in Melbourne last month.

“If they come to the ATO, what’s a safe harbour? What’s taken off the table? And how can I encourage my client to come forward and work with us? What is the benefit?

“That’s what we’re working on right now.”

Burgess said the ATO was aiming to release a draft of the guidelines before Christmas.

“I think the industry will either like them or love them because you’ll see lots of things that will help you resolve long-term problems and take court action, non-compliance and disqualification off [the table],” he said.

“And if the fund’s in such a terrible situation, we’ll give them an easy, expedited way out.

“We’re looking to do that and how we can get them back into compliance by taking all these other things off the table and giving them legal certainty after [problems] have occurred.

“I’m not saying to hold up any disclosures to us in between, but here we’ll actually show you guidelines, provide case examples and give you [a framework for] exactly how to write in to the ATO.”

Currently, there was confusion about who to contact at the ATO, he said.

“We’ll make it absolutely clear where to go to,” he said.

“We think it will reduce costs.

“It’s within our ability to do that, it will give you clarity, but it also means that for those who decide to take us on, in our defence to the court, we’ll say we gave x opportunities.”

He stressed the guidelines were not attempting to undermine SMSF auditors.

“The SMSF auditor is still the best long-term process to [identify these issues],” he said.

“What we’re talking about here with these processes are things that can’t even wait for the SMSF auditor – the fund’s operation is at risk and normally the trustee would be thinking they could even be looking at criminal circumstances here.

“For example, a son has taken money out of the SMSF for his drug habit and the whole fund has become non-compliant.

“Under this kind of arrangement, it wasn’t the fault of the two other trustees, although they could’ve had some better controls, but is that really the best outcome?”

Under the new process, if trustees came forward, only the responsible party would be disqualified and non-compliance would be taken off the table for the other members, he said, adding the ATO would also work with them to resolve the problem.

“This is what I mean when I say we’re trying to avoid non-compliance,” he said.

Last year about 154 funds were made non-compliant, he said.

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