ATO to address practitioner non-compliance

ATO SMSF practitioners

The number of practitioners failing to meet their obligation as trustees to lodge the fund’s annual return on time is of concern to the ATO.

The ATO has expressed its concerns over the fact sector practitioners are among the number of trustees who are not meeting their SMSF annual return lodgement requirements and has revealed the enforcement strategy it is taking to address this issue.

“We are really concerned that some of our outstanding lodgements are from tax agents and from auditors. We obviously hold industry professionals to a higher standard, especially as it’s part of the annual declaration [that] tax agents make to the Tax Practitioners Board and similarly [the one] auditors [make] to ASIC (Australian Securities and Investments Commission),” ATO SMSF risk and strategy assistant commissioner Justin Micale told attendees at the recent Chartered Accountants Australia and New Zealand SMSF Conference 2021.

In response to the situation, Micale pointed out the regulator will be implementing a course of action incorporating one element of the ‘three strikes and you’re out’ policy it has implemented for other trustees who are late or simply ignoring their legal obligation to lodge an annual return.

The three strikes policy involves a series of ‘nudge’ letters varying in the level of severity of the message they contain to encourage trustees to ensure their annual return lodgement activity is up to date.

The final letter in the sequence is referred to as the red letter, which informs trustees the ATO has already taken enforcement action specified in the previous pieces of correspondence.

“To address non-compliance with this group we’re currently liaising with the Tax Practitioners Board and will soon be issuing our red letters as part of a separate mail-out to this group,” Micale noted.

While a more drastic enforcement strategy has been initiated for practitioners, his message with regard to addressing these non-compliance problems was consistent for all trustees.

“The key message I have for lapsed and never lodgers is that we’re serious about driving on-time [annual return] lodgement,” he warned.

“However, if you or your clients are experiencing difficulties, we encourage you to contact us so we can help.

“Coming to us first is always a better option than waiting for us to come to you.”

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