SMSF practitioners and members should ensure they lodge accurate Notices of Intent (NOIs) for deduction claims on personal superannuation contributions, as auditors are no longer responsible for identifying inconsistencies after the removal of the work test requirement last year.
Smarter SMSF chief executive Aaron Dunn emphasised the importance of submitting valid NOIs to ensure compliance in regards to contributions, as the work test changes meant the ATO will have more power to act on the matter.
“The fact that we can use this deductible contribution approach is really advantageous but what comes with that is the importance of getting [notices of intent] valid, and we have some specific requirements within the Income Tax Assessment Act (ITAA) that will invalidate [those notices] if we don’t get these things right,” Dunn told attendees at a Smarter SMSF technical webinar last week.
“Remember that from 1 July 2022 we’ve moved from an acceptance regime within the SIS (Superannuation Industry (Supervision)) regulations with a [self] declaration into the Tax Act, and the ATO can call on that at any point in time as part of the annual return to ask if you have actually satisfied the test.
“This will be the first return that we’re going to have to potentially identify or explore that issue, with the ATO having more scope to inquire than they had previously. And therefore, the way in which they will address this issue, is going to be very different to what we’re seeing in previous years.”
As a result of the changes, from July 1, 2022 superannuants over the age of 67 must declare they have satisfied the work test to enable them to claim a tax deduction for personal super contributions to the ATO on their tax return, rather than super fund trustees.
Smarter SMSF technical and educational manager Tim Miller pointed out that the new requirement shifts responsibility from auditors to trustees and members to ensure compliant notices of intent are being lodged.
“There’s this great sense of relief [amongst auditors] of ‘we don’t have to worry about that anymore’ with regards to the work test,” Miller said.
“Historically there was a checkpoint which was the fund auditor because you had to meet the work test to make a contribution for the fund to be able to receive it in the first instance but now that we have removed one of those barriers to the audit process and the acceptance of contributions, it does mean that the watchdog shifts from being the friendly auditor to the potentially not as friendly ATO.
“Being able to show that you’ve lodged your tax return, that you’ve got income to declare, or whatever the situation might be, is going to become far more relevant.”
Earlier this week, the ATO reminded trustees that they must promptly acknowledge valid Notices of Intent.