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ATO, Auditing

SAN misuse on the rise

SAN misuse SMSF returns

The ATO has found the misuse of SMSF auditor numbers on fund annual returns rose in the 2021 income year.

Responses to the ATO’s most recent mail-out asking auditors to check the veracity of information contained on fund annual returns has shown instances of SMSF auditor number (SAN) misuse increased in the 2021 financial year.

The regulator undertook the latest mail-out in September last year, with the exercise indicating the issue had worsened in the previous income year.

“We detected more SAN misuse than in previous mail-outs, with more than a third of instances of SAN misuse relating to SARs (SMSF annual returns) that were lodged late,” the ATO said on its website.

Specifically, the information gleaned from the September 2021 mail-out uncovered 1896 instances of SAN misuse, with 65 per cent, or 1230 instances, relating to SARs for the year ended 30 June 2020 and a further 25 per cent, or 481 cases, pertaining to SARs for the 2021 income year.

Further, the exercise found the SAN misuse was associated with 683 tax agents and 24 trustees who lodged a fund’s annual return themselves.

Statistics uncovered a significant amount of service providers had committed multiple offences, with 50 tax agents found to have been connected to more than five instances of SAN misuse involving 812 funds.

In addition, it was discovered 411 tax agents were connected with one instance of SAN misuse.

“We take SAN misuse seriously. Where a tax agent is found to have misreported SANs across multiple funds or multiple years, we may refer them to the Tax Practitioners Board or for criminal prosecution,” the ATO warned.

The regulator’s mail-out procedure provides registered SMSF auditors with a list of funds they purportedly audited, as per fund annual returns, in the most recent financial year regardless of the income year involved. SMSF auditors are then asked to confirm they performed the audits where their SAN has been referenced.

In April, the ATO reported the mail-out strategy had resulted in a positive shift in the instances of SAN misuse.

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