Compliance, Superannuation

Trustees reminded to self-report SMSF breaches

SMSF trustees contraventions ATO

The ATO has given SMSF trustees a reminder to self-report any contraventions, but also to be prepared to come with solutions when seeking its help.

More than 900 SMSFs have voluntarily disclosed contraventions that have taken place within the funds over the past three years, with the ATO urging other funds to report any breaches to prevent heavy enforcement actions or administrative penalties.

In an update on its website directed to SMSF trustees, the SMSF regulator noted 920 funds had made voluntary disclosures since May 2016 and it had worked with the fund trustees and their advice professionals, including accepting rectification proposals or allowing the fund to be wound up.

It pointed out any problems detected within a fund should be addressed through its SMSF professional, including the fund auditor, but where that may not work, SMSFs could call on the ATO’s early engagement and voluntary disclosure service.

“We understand that sometimes mistakes happen and we encourage you to be proactive when this does happen,” the ATO stated.

“If you voluntarily disclose an unrectified contravention before we commence an audit, your disclosure will be taken into account in determining the enforcement action we take and the appropriate level of remission of administrative penalties.”

It pointed out the service would still require an SMSF to be engaged in rectifying any problems it disclosed and any outstanding annual returns for the fund had to be lodged before seeking ATO assistance.

“You must provide us with all relevant facts, supporting documentation and a rectification proposal or proposed enforceable undertaking and actively engage with us throughout the resolution process.”

At the SMSF Association National Conference in February, ATO superannuation assistant commissioner Dana Fleming said only 2 per cent of lodging SMSFs were contravening the Superannuation Industry (Supervision) Act and 50 per cent of SMSFs self-rectified a contravention, when they were advised of the issue, before lodging their tax return.

At the time, Fleming said the most common contraventions were loans to members, investments in in-house assets and failing to keep personal assets separate from the SMSF.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital