ATO SMSF Compliance Focus

March 1, 2012

ATO SMSF compliance focus for trustees

Andrew Frith, the CEO of the Self-Managed Super Specialists headquartered in Newcastle NSW, is drawing the attention of all self-managed super fund trustees to compliance issues raised by the ATO recently.

The ATO has three major focus areas for their SMSF compliance program:

non or late lodgments
compliance breaches without an auditor contravention report
unrectified auditor contravention reports (ACR).

SMSFs must lodge a return with the ATO every year after being audited.

SMSF trustees who do not to lodge returns may receive assessments with penalties based on the information available to the ATO. Funds may also be made non-complying. Additionally, Trustees who do not meet their fund's lodgment obligations may be prosecuted.

The ATO's present compliance activities around lodgment focus on:

related-party investments including lending to members
breaches of the 5% in-house asset limit
exempt current pension income (ECPI) and non-arm's length income
ACRs lodged for SMSFs that are under 15 months old (new funds must report all identified contraventions).

Contraventions related to lending and in-house assets continue to be significant. There has been a continued upward trend of borrowing contraventions which account for close to 8% of all contraventions reported and 6.4% of rectified contraventions.

It is in your best interest to appoint an auditor who will detect and report breaches. If breaches are not reported to us, you may face serious consequences.

During 2010-11, the ATO conducted about 5,200 regulatory and income tax cases and just over 2,700 illegal early release cases against individuals.

ATO SMSF Lodgement

The SMSF annual return lodgment dates are fast approaching for most funds. To ensure you are not in breach of any superannuation law, seek the advice and assistance of the Self-Managed Super Specialists. They will assist in all areas of your Self-managed super fund and meet all ATO requirements.