A sector specialist has warned against ignoring communications from the ATO regarding outstanding SMSF annual returns (SAR), particularly when the fund involved has been earmarked to be wound up.
Heffron head of SMSF technical and education services Lyn Formica issued the note of caution in light of the regulator’s continued concerns over SAR non-lodgement.
“You may have seen some announcements from the ATO back in July [indicating it is] very, very worried about late lodgement of returns. [To this end], 10 per cent of 2023 returns haven’t been lodged,” Formica confirmed.
“When [returns] are outstanding, [the ATO] is fearing illegal early access [and] it is fearing compliance problems.”
She pointed out the regulator has tried different approaches to improve SAR lodgement without success and is now looking at implementing more severe penalties for this type of compliance breach.
“The next time you get one of those letters [informing you a particular fund has an outstanding annual return], don’t put it in the bin. Actually follow through on it because [the ATO] is now threatening disqualification of your clients,” she told delegates at the Heffron Super Intensive Day 2025 held last week.
She took the opportunity to emphasise the fact the specific SMSF is about to be wound up should make no difference as to how seriously regulator correspondence of this nature should be treated.
“You might think ‘the fund’s going to be would up anyway so who cares if they get disqualified as a trustee’. Just remember that [disqualification will be] on the public record so career prospects might be impacted,” she said.
According to Formica, ATO trustee disqualifications for individuals who are also accountants, tax agents or financial advisers have the potential to result in extremely severe consequences.
“If you are a financial planner or tax agent, for example, and you have not lodged your outstanding returns and you get one of those [ATO] letters, and you get disqualified, you’re not going to be able to keep your tax agency,” she indicated.
“You’re not going to be able to continue as a financial planner because you’ll have a black mark against your name that basically says you can’t be trusted.
“So [if you get one of] those letters, going forward, I would pay attention to them and I would let your staff know to pay attention to them. I wouldn’t want to [test] if it’s a hollow threat or not.”
