The ATO has provided a new perspective on the importance of having SMSF annual returns (SAR) lodged each year, highlighting the significance the practice has with regard to the overall assessment of the sector’s health.
ATO deputy commissioner Emma Rosenzweig told attendees at the SMSF Association National Conference 2025 in Melbourne last week that the regulator could not ensure the exact degree of trustee compliance if SARs were not lodged.
“Our data is telling us that between 96 and 97 per cent of funds each year do not have any contraventions reported by their auditor, which demonstrates a strong level of compliance within the industry. This is terrific because it means the vast majority of SMSFs are doing the right thing,” Rosenzweig noted.
“While 3 to 4 per cent isn’t a large number of SMSFs, in the context of a $1 trillion sector, the amount of super savings at risk is not insignificant … but it is important here to note that this 3 to 4 per cent is only based on SMSFs that have lodged their annual returns.
“Non-lodgement restricts the ATO in correctly administering the rules around concessional and non-concessional contribution caps, Division 293 [tax] and assessing transfer balance caps.
“These are important rules that have been put in place to ensure equity in the superannuation system and avoidance of them by failure to lodge returns and report accurate information to the ATO is serious.”
According to Rosenzweig, 85,000 SMSFs are still yet to lodge a return for the 2023 income year.
“In addition to that, we have approximately 54,000 SMSF annual returns that are still outstanding for the 2022 income year,” she revealed.
“So, while I mentioned earlier that only 3 to 4 per cent of SMSFs have a contravention reported, this is only based on those who have lodged their annual return. We expect that a higher proportion of non-lodgers have contravened the regulatory rules.”
She emphasised non-lodgement of SARs is an indication to the ATO a fund may be engaged in illegal early release activities and pointed out the SMSF’s registration details will be removed if trustees who miss the lodgement deadline fail to contact the regulator.