The ATO will not conduct an SMSF auditor number (SAN) misuse mail-out this year, but instead engage in targeted action in key risk areas after identifying previous mail-outs had changed tax agent behaviour, according to the regulator.
ATO superannuation and employer obligations director Paul Delahunty said in recognition of shifts in compliance behaviour and how the regulator was addressing risks identified in previous years, it was changing its approach to examining SAN misuse in the current financial year.
“In relation to the mail-out, we won’t be conducting a targeted campaign this year as we’ve done in previous years. We will still have client lists available to auditors if they like to request those,” Delahunty said during a recent session at the SMSF Association Audit Day.
“We will look at other options around more targeted compliance campaigns and focus on behavioural areas where we know risk is more prevalent, such as where late lodgement has occurred or where multiple late SMSF annual returns (SAR) are being lodged.
“We know they are areas where there is heightened risk and are more likely to draw our attention in relation to where we need to conduct investigations.”
He said the ATO still had ongoing compliance cases from the 2022 mail-out, but noted there had been a decline in intentional SAN misuse in the findings of that exercise, which covered 3800 auditors and 430,000 funds with lodgement dates between 1 July 2021 and 30 June 2022.
“Similar to previous years, the response rate we achieved was 45 per cent, which was reasonably healthy, but what we did find in comparison to prior years was a reduction in the reported rate of SAN misuse,” he said.
“Compared to the prior year, we had probably more than 50 per cent less SAN misuse reported than in 2021 and those results were also significantly reduced in relation to the 2020 mail-out. So what we’re observing is a decline in SAN misuse being reported to us and it’s been apparent year on year for the last two years.”
The predominant reason for SAN misuse was software errors where an auditor’s details on a SAR were not being updated prior to lodgement, he said.
“We’ve been able to conclude that in comparison to previous years, there’s been a significant downward trend in occurrences of SAN misuse with minimal instances of deliberate misuse now being detected, which is a great behaviourial shift that we’ve been able to confirm from this work,” he said.