2015 FY SMSF Audit update: 11 weeks down; 15 weeks till Christmas….
Is it mid September already and was I imagining the Christmas decorations I saw in stores this week?
Hopefully we are all well into completing compliance work for our clients and their SMSFs in the run down (run up?) to the crazy season…
Here at TriSuper, we have started to receive a steady stream of 2015 audits and thought it timely to highlight the top four SMSF audit issues that are consistently arising:
- Valuation of Assets
The SIS Act requires that assets must be shown at market value in the yearly financial statements.
This is usually straightforward for cash and listed equities, but less so for real property and non-traditional assets such as artwork and other collectibles.
We would suggest consulting available ATO guidance which includes informative checklists and specific advice on valuation of assets such as real property.
- Investment Strategy
Yes, I know….
As noted in our June newsletter, this is the most commonly missed document and possibly one of the most important.
We would stress the importance of ensuring all your SMSFs have a strategy that complies with the regulation.
In relation to the requirement to consider insurance, we believe that the Trustees should fully document reasons for either having or not having insurance for each member, rather than just a yes or no answer.
- Assets held in the wrong name
This still continues to be a common problem and usually arises where a SMSF has individual trustees.
The ATO has provided guidance to assist, but the general rule continues to be that in the case of individual trustees, all trustees’ names must appear. Of course, having a corporate trustee does make life a lot easier.
There will continue to be circumstances where the super fund cannot be noted on title documents such as the NSW land titles office. There are however ways to address this, as the ATO notes.
- Non-Arm’s Length Transactions
Most commonly seen where a SMSF leases a commercial property to a related party directly or through an interposed unit trust.
You should ensure your client has an arm’s length commercial lease in place with the related lessee and that it is adhered to.
Too often we see cases where the lessee is behind with rent payments or has even paid well in excess of a market value amount. Both over and underpayment can lead to negative consequences.
Hopefully, conducting these checks will ensure for a smooth audit process. As always, please call if you have any questions.
If you would like help with any of these issues, please contact Joel Curry directly on
1300 TRISUP
or 02 4961 2788