ATO outlines compliance approach as COVID relief ceases

For the 2019–20, 2020–21 and 2021–22 financial years the ATO offered SMSF residency relief, rental relief, loan repayment relief, and in-house asset relief.

“This support was offered in recognition of the significant financial impact COVID-19 had on SMSFs, particularly in some states or territories where there were reoccuring and prolonged lockdown periods,” the ATO noted.

The ATO stated that some SMSF trustees found themselves in a position where they, or a related party of the fund, were providing or accepting certain types of relief which resulted in contraventions under the super law.

“Many countries also imposed travel bans and restrictions which resulted in SMSF trustees being stranded overseas, which may have affected the fund's residency status,” it stated.

However, with the ATO’s COVID-19 support ending on 1 July this year, the ATO said that for the 2022–23 income year and later years, it expects trustees to now comply with their obligations under the income tax and super laws previously covered by the relief.

“Approved SMSF auditors must report contraventions to us via the Auditor/actuary contravention report (ACR) where the reporting criteria is met,” the Tax Office stated.

“If contraventions occur, trustees should use our voluntary disclosure service and make a plan to rectify the contravention as soon as possible. We take any voluntary disclosures into account when determining what actions we will take.”

The ATO also reminded trustees that for the 2021–22 income year they must ensure they document any relief they accessed and provide their approved SMSF auditor with evidence to support it for the purposes of the annual SMSF audit.

“When conducting the compliance audit, auditors should refer to the Addendum to the ACR Instructions to determine when to report contraventions to us and what evidence to obtain from the trustees,” the ATO said.