SMSF trustees who have breached their obligations should be advised to use the ATO’s voluntary disclosure service, but only after gathering full details of the issue and any remedial action they have taken to prevent further problems, an auditor specialist has suggested.
BDO director Shirley Schaefer said while voluntary disclosure may seem to be “a little bit of a confessional”, it is a good way to mitigate the ATO’s response to a contravention and any penalties that may be imposed.
“Voluntary disclosure can demonstrate the trustees made an honest mistake and the willingness they want to change their behaviour, which goes a long with the ATO treating trustees in a much better light,” Schaefer said at the recent SMSF Association National Conference 2025 in Melbourne.
“When these things occur, it’s really about telling a story that puts the trustees in the best possible light. Sometimes contraventions occur because circumstances got out of control, so do provide as much detail as possible.”
She pointed out that in detailing what went wrong it was essential the auditor of the SMSF was also made aware of all actions that had taken place.
“Voluntary disclosure doesn’t mean you don’t talk to your auditor,” she said.
“In our workbook [at BDO], we have a work paper that’s entitled ‘Notes to auditor’ and we tell them if there’s a contravention, provide all of the details so they don’t have to go hunting for it.
“So confess upfront to the auditor what’s gone wrong in the file, give them as much information for their contravention report, and where it’s been rectified, provide evidence of that rectification.”
She added that in addition to providing sufficient information and taking remedial action, trustees should consider becoming more aware of what happened and how to prevent it.
“The one thing that I do think is essential is to have trustees complete approved trustee education before they submit their voluntary disclosure forms,” she noted.
“That goes a long way to showing the ATO the trustees are serious about wanting to do the right thing.
If they don’t do it, they’re probably going to get an education direction anyway, so doing it upfront means you’re showing that contrition and being proactive in trying to resolve the issue.”
