The volume of SMSF establishments that took place at the beginning of the 2023 financial year has created processing issues for the ATO.
The SMSF Association acknowledged it is not unusual for there to be a large number of applications to set up a self-managed fund in July and August, but this year’s traffic has tested the regulator’s ability to process them all in a timely manner.
“We have been receiving many complaints from our members that it is taking longer than usual to register a new SMSF. We have been able to confirm with the ATO that they are currently experiencing a backlog in applications due to the increased number of registrations as well as internal resourcing issues,” the industry body communicated to its members.
In light of the situation, it has recommended practitioners allow for these delays and to complete as much preparation work as possible to ensure fund set-up can be completed in the most seamless manner.
“It is strongly advisable that when establishing a new SMSF, you refer to SuperFund Lookup to check whether the fund name chosen has been used previously as it is common for SMSFs without a unique name to encounter unnecessary processing delays,” it suggested.
The SMSF Association pointed out the situation highlights the need for the continual improvement of the establishments process and confirmed it was in constant dialogue with the ATO about that.
“We recognise the registration process is key to mitigating the risk of fraudulent activity and inappropriate access to super, but we feel there is a need to continually pursue improvements which do not undermine the integrity of the process,” it said.
“We remain of the strong opinion that where a trusted professional from the sector is involved in the set-up process, there are further opportunities to explore with the ATO to allow funds to be registered whilst the necessary integrity checks are undertaken by the ATO in the background.”
According to the association, the ATO has given assurances it is working on clearing the registration backlog as soon as it can.