Now a good time to come clean

ATO SMSF breaches

No-action positions taken by the ATO should encourage SMSF trustees to voluntarily tackle other compliance-related issues in their funds, an SMSF lawyer has advised.

SMSF trustees and advisers should use the end of this year to ‘come clean’ to the ATO about any breaches as they were more likely to receive a favourable outcome, an SMSF legal expert has claimed.

Cooper Grace Ward partner Scott Hay-Bartlem said a range of COVID-19 measures, such as rent relief, property valuations and early release of superannuation, may have caused problems for SMSFs during the year, but now was a good time to voluntarily address those issues with the ATO.

“If you have tried dealing with the ATO recently, you will know they are a bit distracted, so it might be a good time if you have an issue to take up an early intervention, to get on the front foot, ask for a ruling and try to do something to solve the issue,” Hay-Bartlem said as part of the firm’s SMSF Virtual Intensive Day today.

“The ATO is taking quite a pragmatic, practical, commercial, useful, helpful view as to how it can help SMSFs comply.

“If it [the ATO] had been nasty, it would have been so much harder dealing with the COVID-19 issues and they accept the last thing SMSF trustees want to do, when a business is in trouble and kids are at home, is to try to run around and work out valuations and rentals.”

He said the ATO had already publicly stated it would be taking no-action positions on a number of issues related to COVID-19 relief measures, but trustees should still be proactive in dealing with other concerns.

“The reality is at the moment they are preoccupied and under-resourced and it is a good time to convince them to get you off their desk,” he said.

“They are being reasonably generous with their compliance approach and are also acknowledging there may be different ways to solve things.

“We have some clients with undertakings and rectification directions that we can’t comply with because the way the market is and they have been very helpful at trying to sort that out and taking a practical view.”

He noted the recently released ATO staff guidelines around the imposition of penalties for breaches state the imposition of penalties was automatic when a breach occurred, but remission was dependent on ATO case officers.

“We have seen a change from their approach in imposing penalties in the past and the guidelines do emphasise to get on the front foot and help them,” he said.

“If you look at legal cases around compliance in the past few years, they all have been situations where people argued and not worked with the ATO to solve problems.

“Our experience is you can work with the ATO to solve problems and it will come out in the wash and they will help you work things through.”

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