A senior SMSF stakeholder has acknowledged the removal of what the ATO theoretically considers ‘as soon as practicable’ in its guidance with regard to the payment of death benefits will make the audit process more seamless and less of a burden for practitioners.
Specifically, Institute of Financial Professionals Australia (IFPA) head of technical services Natasha Panagis was referring to the fact the regulator no longer refers to six months being the suggested definition of ‘as soon as practicable’.
“[This] is a welcome change [because] technically this six-month period is not [referred to] in the SIS (Superannuation Industry (Supervision)) Act or the SIS Regulations or in the tax legislation. [It is just an arbitrary timeframe] so the ATO has removed it,” Panagis told attendees of the Super Playbook 2025 event, co-hosted by IFPA and the Auditors Institute recently in Sydney.
“[The ATO has] realised there’s no timeframe on death and it is difficult to pay [for example] a death benefit pension, particularly for members who are dealing with the loss of a loved one. There are a number of hoops they need to jump through [in this situation and] granting probate can take up to six to 12 months on its own.”
According to Panagis, the guideline amendment will improve the SMSF audit process in the future.
“Where the death benefit [payment] was delayed and there was no explanation as to why there was a delay, this was forcing auditors to qualify their audit report for a breach of the payment standards because it was being paid within six months,” she explained.
“This was an issue and I think [the ATO] was receiving a fair few [auditor contravention] reports.
“So I think [the regulator] has used some common sense to say: ‘Well six months might be too short, let’s remove it and let’s just leave it to professional judgment and provide people with more flexibility.’”
Despite the change, she emphasised it was still very important to document any reasons causing a delay in paying an SMSF death benefit.
