Trustees looking at winding up their SMSF and rolling money over into an Australian Prudential Regulation Authority (APRA)-regulated fund via SuperStream may run into problems if the fund’s Australian business number (ABN) is cancelled as part of the process.
Smarter SMSF chief executive Aaron Dunn said while the SuperStream system had been online since 1 October, the ATO had become aware of an issue surrounding the ABN of any SMSF that had been shut down.
“The wind-up process does have a bug in it at the moment where a wind-up occurs and an SMSF gets a tax refund and the fund wants to roll that money into the APRA-regulated fund as well,” Dunn said during a webinar today.
“The problem that exists is upon lodgement of the final SMSF annual return, the ABN of that fund gets cancelled. This means when someone does the validation check to move the refund across, that cancelled ABN is no longer there and therefore that transfer won’t be able to occur.”
He said the ATO was aware of the issue and had been receiving feedback from the SMSF sector about its occurrence.
“The ATO has identified that issue now after having consulted with industry and are doing some more work around that process,” he said.
“So you should be going back on the ATO’s website regularly or checking through the newsletters that they’re sending to find out the approaches they are using as they work through the rollout of SuperStream.”
He added the ATO had also identified two types of users of the SuperStream service, with some following the instructions and completing rollover within three days, but others still starting the process with incorrect or insufficient information.
“The ATO is finding there is a cohort of people that are getting this right and getting it done very well, and there is a separate cohort that clearly aren’t understanding all the nuances that need to be put in place to ensure that it processes correctly,” he said.
He said incorrect bank account details were still a key issue with SMSFs and many were still in the personal names of the members rather than in the name of the fund.
“We need to ensure the bank accounts are in the name of the fund. It is surprising the number of naming conventions used and that a fund’s banking records do not match for the purposes of that transfer,” he said.
“It may be that the ATO records show the SMSF refund is going into a trust account or a personal account, which I still find staggering that that sort of stuff exists, so bank account naming protocols are absolutely critical to this process.”
