Revised accounting standard may impact SMSFs

accounting standard SPFS

SMSFs that use special purpose financial statements (SPFS) must ensure their trust deed is set up accordingly thanks to a newly amended accounting standard.

The ATO has drawn attention to an amended accounting standard impacting SMSFs that might want to prepare special purpose financial statements (SPFS).

The regulator pointed out the amended accounting standard, AASB 2020-2, could affect SMSFs looking to prepare SPFS if the funds have trust deeds requiring their financial statements to be prepared according to Australian accounting standards (AAS).

The amended standard was recently released by the Australian Accounting Standards Board and is due to come into effect on 1 July 2021.

“This change means new SMSFs that are set up after 1 July 2021 and wish to prepare SPFS will need to ensure they don’t have a clause in their trust deeds that requires their financial statements be prepared in accordance with the AAS,” the ATO said in an update on its website.

“Similarly, existing SMSFs that intend to change their trust deed after 1 July 2021 should remove such a clause if they wish to continue preparing SPFS.”

The regulator also reassured trustees most SMSFs were unlikely to be affected by the change as trust deeds did not typically refer to the AAS.

“Most SMSF trust deeds refer to the financial statements being prepared in accordance with the super laws and do not refer to the AAS, so this should not become an issue for the majority of SMSFs,” it said.

In a separate update on its website, the ATO noted it had drafted additional instructions to auditors for reporting contraventions for the 2020 and 2021 financial years that reflect the relief measures implemented as a result of the coronavirus pandemic.

“These instructions are contained in the addendum to the auditor’s contravention report (ACR) and provide guidance around how auditors can determine whether a fund has complied with the super laws and when contraventions should be reported to us when it comes to [COVID-19 relief measures],” it said.

The relief measures covered by the new guidance include rental relief to tenants, limited recourse borrowing arrangements repayment relief, in-house asset relief and early release of super.

The regulator also pointed out additional instructions had been included in the part B compliance engagement section of the SMSF independent auditor’s report to reflect the ACR instructions.

“The instructions advise auditors they do not need to modify their opinion in part B of the report where certain material contraventions have arisen due to COVID-19 relief specific to the 2019/20 and 2020/21 financial years,” it added.

Yesterday, the ATO repeated its warning it would come after people exploiting the superannuation early release scheme under COVID-19 relief provisions, adding it would use data-matching tools to determine if people were eligible to withdraw funds or recontributed them for a tax advantage

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