The ATO cited the problem as one of the top five errors made when SMSF annual returns (SARs) are lodged to the regulator.
SMSF assets need to be calculated at market value as at 30 June to prepare the fund’s accounts, statements and SARs, the ATO said.
In a blog, Smarter SMSF chief executive Aaron Dunn said the 1 July 2017 reforms have really put the issue into focus from a regulatory standpoint.
“As indicated by the ATO, inaccurate valuations can pose problems across the payment of income streams, which may prejudice the fund’s ability to claim ECPI and across various investment restrictions, [and] failure to adequately value assets to market value could lead to the commissioner applying the non-arm’s length income (NALI) rules, taxing the ordinary and statutory income of such assets at 45 per cent,” Mr Dunn said.
Another major issue with SARs mentioned by the ATO was when a bank account was found to not be unique to the SMSF.
The ATO said a fund needs a bank account that is in the name of the fund to manage the SMSF operations, along with accepting contributions, rollovers of super and income from investments.
Mr Dunn said he was surprised that this was still a common issue among SMSFs.
“In today’s SMSF world, it is somewhat staggering that the ATO still has problems with bank accounts not being unique to an SMSF,” he said.
“SISR 4.09A forms part of the compliance audit each year and requires an auditor to obtain evidence that the fund’s money and assets are held separately from money and assets held personally by the trustees or a standard employer-sponsor.”
