ATO, Compliance, Documentation, SMSF

Practitioners judged more harshly

ATO Tax agent Documentation Evidence SMSF

SMSF practitioners should maintain the highest documentation standards for their own funds due to the degree of scrutiny the ATO applies to them.

There is a greater need for advisers, accountants and auditors to keep comprehensive evidence of any actions they take regarding their own SMSFs that carry compliance risk against them as the ATO will have less sympathy for any breaches they commit, according to two sector specialists.

Deloitte superannuation, SMSF and retirement savings partner Liz Westover acknowledged the ATO’s focus on compliance with superannuation and tax law in regards to SMSFs was set at a higher standard for those working within the sector.

“In regards to this everyone needs to sit up and pay attention whether it’s auditors, accountants, tax agents, and so forth, as the ATO has been clear they hold professionals to a higher standard when it comes to looking after their own tax and super affairs,” Westover said during a panel session at The Tax Institute’s recent Super Intensive.

“As tax agents, we have an obligation under the code of conduct to make sure our own personal tax affairs are in order and equally that goes for an SMSF.”

Westover pointed to the case of WZWK and Commissioner of Taxation (Taxation) [2023] AATA 872 where a practitioner who was an accountant, tax agent and auditor engaged in illegal early release from their own fund which resulted in losing their tax agent registration and their disqualification as an SMSF auditor.

“We have also seen cases where tax agents have misused the superannuation auditor number by putting in the wrong number or using a number when no audit undertaken and those people have also lost their tax agent registration,” she observed.

“We are being held to a higher standard around what we do.”

Fellow panel member DBA Lawyers special counsel Bryce Figot noted appropriate evidence may have altered the outcome of the case and suggested SMSF practitioners should be documenting their own actions.

“The person [in WZWK] had an argument but where it failed, and where a lot of taxpayers fail, is they did not have the evidence to ascertain what they wanted to prove and the AAT weren’t very convinced by it,” Figot added.

“It is important to retain sufficient evidence to prove the relevant facts of your case. A lot of taxpayers in the hustle and bustle of making money don’t obtain and retain relevant documentation or don’t review it with sufficient objectivity to think how [it will] look to the ATO.

“So when it’s for us, personally as practitioners, we can expect even less sympathy.

“If you look at the practice statement from 2006 about when the ATO will make a fund non-complying one of the things considered your level of professional sophistication and experience. In other words, there will be no sympathy for anyone watching today.”

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