ATO, Compliance, Tax

New SMSFs targeted for non-lodgement

SMSFs annual returns

New SMSFs are failing to lodge annual returns and abide by their taxation obligations, drawing the attention of the ATO.

A growing number of newly established SMSFs are failing to lodge their initial annual tax returns, risking sanctions under the ATO compliance regime for the 2024 financial year.

ATO SMSF auditor and portfolio director Kellie Grant said SMSFs with outstanding prior-year returns were of concern to the regulator, which was particularly focusing on an increasing number of funds failing to lodge their first annual return.

“This appears to be on the rise because over the last five years we have seen significant growth of SMSFs failing to lodge [the first return]. Unfortunately, this population has grown significantly from 7 per cent in 2016 to over 18 per cent in 2021,” Grant told attendees during an online ATO SMSF update today.

“Around 18 per cent or 4500 of the 26,000 new funds registered during the 2021 financial year have not lodged. And 28 per cent of the new funds that were registered during the 2020 financial year have also not lodged, which could be an indication of illegal early access.

“Lodgement is the most fundamental obligation for all SMSF trustees, including those in retirement phase, because the SMSF annual return provides us with visibility of the funds’ compliance with its regulatory and tax obligations and the super balance of its members.”

She emphasised SMSF trustees should be aware of the range of tools available to the regulator for detecting and resolving the issue of non-lodgement of annual returns by funds, such as the new registrant program and the three strikes enforcement campaign.

“To address non-lodgement we use articles [and] targeted mail-outs to remind trustees of their lodgement requirements, which works for the majority of trustees, but there is that persistent group who ignore our reminders,” she stated.

“Under our new registrant program, we [also] risk assess every individual entering the system and identify those that may be entering it for the wrong reasons.

“For those that don’t lodge, we remove their compliance status on Super Fund Lookup, which restricts the SMSF from receiving rollovers and employer contributions.

“For the persistent group of non-lodgers with well-overdue returns, we have our three strikes letter campaign. We have now disqualified 150 trustees who failed to respond to that final warning red letter.”

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