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ATO regrets tone but not intent of letters

ATO investment letters

The ATO will continue its proactive stance in contacting trustees, despite admitting its letters on investment strategy could have been worded differently.

The ATO has admitted letters sent to SMSF trustees late last year regarding investment strategies could have been better worded, but maintained it was necessary to address the issue before it became a wider problem.

ATO superannuation deputy commissioner James O’Halloran made the comments as part of a question and answer session with SMSF Association (SMSFA) chief executive John Maroney at the SMSFA 2020 National Conference on the Gold Coast last week.

“I acknowledge there was some communication issues that were taken in different ways,” O’Halloran said in reference to the letters sent to 17,700 SMSF trustees who mainly held property in their fund, adding, “but I don’t apologise for raising the issue around investment strategies as required by the [Superannuation Industry (Supervision)] Act.”

He said the ATO would continue to be proactive as it believed SMSF trustees preferred to be warned in advance of any potential issues and pointed to new guidance released last week.

“We have in the last few days released further explanation on what we think is a best-practice investment strategy approach and will continue to raise issues even if they are not popular. We want to warn people ahead of time so they don’t get caught in situations where they don’t know or are not aware, and so the commissioner does not have to come out and say ‘we are concerned about this’,” he said.

“The investment strategy is in the realm of trying to get information out before, rather than after, the event and I would like to think people want to hear from us before, rather than after, and that is our intention and we will continue to try and do that.”

In highlighting the new guidance, he said the ATO did not want to interfere in the investments of SMSF trustees, but wanted them to have an investment strategy that is able to be seen and understood and appropriate to their circumstances, and would satisfy the due diligence of an independent auditor.

During the session, O’Halloran and Maroney also formally signed a statement of intent for the two organisations to work closely together over the next three years.

The statement builds on an initial three-year agreement signed by the SMSF industry body in 2017 with ATO commissioner of taxation Chris Jordan.

“Both organisations feel it has been very helpful in our relationship and to use it to benefit our members and SMSF trustees,” Maroney said.

“One concrete example of what this means is the ATO will offer secondment arrangements for its staff to work with the SMSFA to benefit their professional career development and to help us work better for our members.”

O’Halloran added: “The statement of intent is the only one with a regulator in relation to SMSFs and we appreciate your views. John and I, and the ATO and the association, also have some candid discussions about what we disagree on, but at least they are happening then rather not being discussed.”

The next secondee from the ATO will start in the SMSFA’s Sydney office in the middle of 2020, Maroney said.

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