The ATO has revealed non-compliance communicated to it via auditor contravention reports (ACR) trended in the wrong direction during the 2021 income year.
Speaking at the recent Chartered Accountants Australia and New Zealand SMSF Conference 2021, ATO SMSF risk and strategy assistant commissioner Justin Micale told attendees: “For the 2021 financial year we received auditor contravention reports, or ACRs as we like to call them, for over 13,800 SMSFs, with those ACRs reporting over 40,000 contraventions.
“This is an increase of nearly 10 per cent over the last year. But we are actually pleased to see there are areas of improvement as 59 per cent of the contraventions were reported to us as unrectified. While that number is still higher than we would like it to be, it’s better than the previous year where 65 per cent of those contraventions were reported as unrectified.”
Micale pointed out the most common contraventions reported by SMSF auditors were with regard to loans, in-house assets and a lack of separation of assets.
According to Micale, these problematic areas have remained fairly consistent over time, but have taken on more significance as SMSF member balances have noticeably increased.
“This means as the number of reported breaches grow, so does the potential retirement savings at risk,” he noted.
With this in mind, he shared the main drivers of compliance breaches ATO analysis had now identified and gave an insight as to how the regulator manages these situations.
Despite the increase in ACRs submitted by auditors, he said the regulator was pleased with the overall compliance record of SMSF trustees.
“We consider that the sector displays excellent regulatory compliance, with 97 per cent of the lodging SMSF population doing the right thing as their independent audit found no reportable contraventions,” he noted.
