The SMSF sector has recorded low rates of non-compliance and its performance has been endorsed by the ATO, according to an SMSF specialist.
SMSF Alliance principal David Busoli said, “The ATO is very pleased with the level of compliance and lodgement timeliness of the SMSF sector. In fact, its metrics are better than any of the other sectors” drawing on statistics presented by ATO assistant commissioner Dana Fleming at the recent Chartered Accountants Australia and New Zealand National SMSF Conference 2019 to make his claim.
Busoli highlighted statistics presented by Fleming that showed during the 2019 financial year there were 10,330 SMSFs that had 27,719 contraventions reported from a total of around 600,000 funds operating during that year.
“This is exceptional given that it means that there were no contraventions reported on over 98 per cent of funds lodged,” he said.
“Of the contraventions, about 50 per cent were rectified before they were reported,” he added, picking up on the numbers presented by Fleming and noting the most common contraventions related to loans, in-house assets and separation of assets.
He said the ATO’s response to an unrectified contravention was dependent on the type of breach, the compliance history of the SMSF, any previous contraventions by the parties involved and penalties available to the regulator.
“Disqualifying a trustee or making a fund non-complying will only be considered as a last resort. To stay in the system, trustees may be given an education direction, a direction to rectify or an enforceable undertaking,” he noted.
“As an indication of the sector’s health it should be noted that with around 600,000 funds in force in 2019, there were less than 500 enforcement actions. Of these, there were 26 notices of non-compliance and 145 disqualified trustees.
“The SMSF sector is large and variable. That means there are both good and bad news stories. Given the focus that is enthusiastically given to the negative aspects – real, imagined and manufactured – it’s great to have the endorsement of the regulator – the one that matters, not the other one.”