During 2020 and 2021, ASIC and the ATO took a conciliatory approach to SMSFs. Leeway was given, and the preferred path for errors or omissions was to educate and support SMSF trustees and professionals.
That period of grace they afforded the SMSF industry is over.
The ATO is aware that “The main drivers of regulatory contraventions are often financial stress, poor record- keeping, and a lack of understanding of the rules.”
But they are now enforcing the regulations. Here are their major concerns, now:
1. SMSF lodgement is a priority
There are 34,000 new funds still to lodge their first SMSF return.
For the ATO this is a red flag, and they are particularly concerned about early release fraud.
There are another 60,000 lapsed lodgers with more than one return outstanding.
The ATO is writing to and chasing up all concerned: trustees and tax agents. They are agitated about this.
2. Auditor independence matters
ASIC is enforcing this with zeal. To date they have
- Deregistered 21 SMSF auditors
- Imposed additional, onerous conditions on 16 more. Which included a requirement to notify their professional association.
No one wants that.
3. Cracking down on
- High risk auditors – especially high volume, low-cost audits.
- Incorrect SAN used to by SMSF professionals or trustees. Either incorrect details or no audit.
4. Demanding a high level of documentation from auditors
This is now the new minimum standard, so expect auditors to require evidence to
- support market valuations of property.
- affirm lease arrangements for rental properties.
- verify commercial terms of related party transactions
- state that investment strategies have been considered.
- show pension minutes for new pensions.
5. Current NALI expenditure provisions are still in play.
A minor but vexatious one.
We are now in an election cycle, so all political promises are just that. Empty noise.
As always if you have any questions or areas you are uncertain about, please call. We are here to help you.
Live Training in May: Get Bang up to date on SMSFs in 2022. Click here to learn more.