The ATO has updated its auditor/actuary contravention report (ACR) instructions for the 2020 financial year, confirming SMSF auditors will not be required to report a number of breaches that might occur as a result of COVID-19 rent relief measures.
The regulator stated contraventions of superannuation laws, such as the sole purpose test and in-house provisions, that might arise from rental relief being offered to a related party would not need to be reported by SMSF auditors in their ACRs for the current financial year.
“To make it easier for auditors, we are currently updating the ACR instructions for the 2020 income year to state you will not need to report these breaches in the ACR,” it said in an update on its website.
“The SMSF independent auditor’s report should nevertheless still be modified for material contraventions in accordance with the auditing standards.”
Auditors of funds with rental relief arrangements in place should use their professional judgment to decide whether the relief looks reasonable and if the trustee has shown evidence the relief was documented and offered as a result of the impact of the coronavirus pandemic, it added.
“If you are not satisfied the relief offered by the trustee is on commercial terms or it has been offered due to the adverse financial impacts of COVID-19, you should report the contravention and explain in the ACR why you think there is a breach,” it said.
“If we subsequently find the relief was genuinely provided as a result of COVID-19, then we won’t take compliance action against the fund.”
In March, the ATO announced it would not carry out compliance action against any SMSF providing tenants with rent relief or reductions due to the financial effects of the coronavirus pandemic.
Earlier this month, it pushed back the date for the lodgement of SMSF annual returns in response to COVID-19 in a move welcomed by the SMSF Association.