Newly registered SMSF trustees should expect a direct phone call from the ATO after an SMSF expert noted an increase in the number of surveillance checks to ensure funds were being used to accumulate retirement savings.
SMSF Alliance principal David Busoli said the trustees of new SMSFs should be well prepared prior to a phone call from the ATO to avoid the interview being deemed unsatisfactory and therefore the fund registration being rejected.
“What is the reason for commencing the fund? The sole purpose test requires that the fund be dedicated to providing retirement benefits,” Busoli said.
He additionally noted there can be other consequences from owning an SMSF, including “acquiring commercial real estate from related parties which retires bank debt, providing related parties with a ‘permanent’ business location – at market rates and saving tax, but these cannot be the reason the SMSF is established so are not relevant to the question”.
Under legal obligations, SMSF trustees must manage the fund together with equal responsibilities, he noted in response to the “who is managing the fund” question.
However, trustees can seek financial advice from external parties without breaching rules.
To that end, Busoli said trustees should be aware of their responsibilities as well as the contents of the trustee declaration form, which covers trustee duties, contributions and payment benefits, investment restrictions, compliance with the sole purpose test and administration obligations.
“It might be useful, if they need more time to prepare, for trustees to ask the ATO to phone back at a more opportune time. Also, though I am unaware of any activity in this regard, trustees should be sure that the call is actually from the ATO and not some scammer,” he said.
