The latest ATO data has shown over $45 billion in SMSF assets were put at risk as a result of trustees failing to lodge annual returns with the regulator in 2019.
The figures are comprised of two groups the regulator has identified as being ‘lapsed lodgers’ – SMSFs that have lodged returns in the past but have now failed to do so – and ‘never lodgers’ – funds that are yet to lodge an annual return.
“In 2019 we’ve had 71,000 lapsed lodgers. That represents, per their last return, $44 billion of potential super at risk. Obviously that’s the whole of their balance, but we just don’t know what’s happening,” ATO SMSF segment assistant commissioner Dana Fleming told delegates at the recent Self-managed Independent Superannuation Funds Association 2019 SMSF Forum in Melbourne.
“But more importantly, the never lodgers are 33,000 [in number] and that [represents] about $1.3 billion [in super at risk].”
Fleming revealed, having segregated these categories of trustees who have not lodged an annual return in 2019, the ATO’s priority is to pursue trustees in the never lodger group and in particular first time never lodgers.
She pointed out SMSFs identified as first-time never lodgers are of particular interest to the regulator due to the strong correlation between these funds and illegal early-release schemes.
“This is where we can make the maximum impact on the system with the first-year never lodgers. This is because this is our only opportunity to try and intervene before they’ve used all their super and lost their super,” she said.
“Once they’ve spent it, it’s really a dead end. [Often] they’ve spent the money, we then issue them with a tax bill in their individual capacity, they can’t pay it because the reason why they accessed their super is because they didn’t have any money, and then we have a debt that sits in our books for the next 10 years, and then we write it off. It’s a bit of a death spiral.
“So we want to try and get [to them] as early as we can.”
The same set of ATO statistics showed the number of SMSFs failing to lodge an annual return is increasing.