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ATO Hotlist 2020

The ATO are on a permanent war footing about the integrity of SMSFs, after all there’s a lot of people’s future happiness tied up in them.

Right now, they are half-way through auditing the TOP 100 SMSF auditors in the country. Combined we account for over 65% of all SMSFs.

I am delighted to report that TriSuper has been given a clean bill of health.

However, we are only one of ten. The rest have fallen short.

So far, three auditors have voluntarily deregistered, two have been referred to ASIC and 36 have been placed on a corrective training and monitoring program for the next two years. After which they will be re-assessed.

The world of SMSF changes rapidly and is complex. And if you are not keeping up with it daily – auditing funds and learning – you will make mistakes.

And then you are putting your clients and their trustees at risk. Is it worth it?

What are the ATO looking for?

In 2020, the ATO has three main areas of focus:

  • Ensuring SMSF’s have adequate investment strategies, particularly when it comes to rental properties.
  • As of October 2019, double checking ‘non-arms’ length expenses’ and funds paying less than market rate for expenses.
  • They’re also cracking down on the non-lodgement of superfund tax returns.

1. SMSF investment strategies and diversification a focus of the ATO in 2020

It’s generally recommended that trustees spread their risk across multiple asset classes or investments, rather than putting all their eggs in one basket.

For any SMSF, an appropriate investment strategy needs to be carefully considered and thoroughly justified, with documentation covering the risks involved, the composition of the funds’ investments, liquidity of the funds’ assets, the funds’ ability to pay benefits and whether to hold insurance cover.

Extra vigilance is thoroughly advised to ensure this is completed correctly for all funds you audit, lest you be considered liable for any problems the ATO discover.

You can read more about investment strategy here.

Or, if you or your clients have recently received a letter from the ATO questioning an investment strategy, go here.

2. The TBAR remains an issue

Many accountants still don’t quite have their heads around the lodgement of TBAR’s or Transfer Balance Account Reports.

It’s important to ensure you get this right and report on time, every time.

These two previous articles of ours may assist:

3. Top 5 Errors on SMSF Annual Returns

The ATO released a news article on the 25th February 2020, listing the top 5 errors on SMSF annual returns.

It’s important to ensure you’re across these.

The top five errors include:

  1. Bank accounts not unique to the SMSF.
  2. Providing an incorrect electronic service address (ESA).
  3. Not valuing SMSF’s assets at market value.
  4. Trying to lodge with zero assets.
  5. Lodging a SAR without auditors’ details.

You can read the full details here >

4. Beware early release schemes

Unfortunately, there are still individuals and promoters out there who claim they can help trustees release their super early. There is a good chance though that most of these schemes will be illegal.

There are very limited circumstances under which you can release your super early, and any SMSF that gets caught releasing super without meeting these strict requirements can get trustees and auditors into some pretty serious trouble.

If you need any specialist guidance on this, feel free to get in touch.

5. The ATO is offering lodgement concessions in the wake of the recent bushfires

If your trustees have been affected by the recent bushfires across Australia, they may be automatically eligible for deferrals in their lodgement requirements.

Trustees or their SMSF need to be located in specific postcodes, which you can find here.

If you are in one of these designated areas, your income tax, activity statement, SMSF, FBT and excise return lodgements and associated payments have been automatically deferred until 28 May 2020.

You can find out more on the ATO website.

Extra assistance and guidance are always available

That’s a wrap for our 2020 Hotlist, and I hope it proves useful to you.

As always, if you have any SMSF queries, whether we audit your client’s files or not, please feel free to get in touch with us on 1300 TRISUP.

After all, we all want what’s best for your clients – and our specialist expertise is a mere phone call away.