Speaking at the SMSF Professionals’ Association of Australia national conference in Brisbane last week, ATO deputy commissioner Alison Lendon told delegates there are several current and potential areas of concern within the SMSF sector.
Ms Lendon said on-time SMSF annual return lodgement is “still not high enough”, with some overdue funds’ details being removed from the Super Fund Lookup.
“Funds who haven’t lodged will remain off Super Fund Lookup until their lodgements are up to date,” Ms Lendon said.
The ATO is also working with ASIC and other institutions to identify and take action on instances of fraud within the SMSF sector, Ms Lendon said.
She also outlined limited recourse borrowing arrangements as an area of concern and encouraged practitioners to ensure these arrangements are appropriately implemented.
“Make sure you set up the arrangement correctly because there can be serious financial consequences if you don’t. Also, make sure it’s the right investment for the fund,” she said.
However, Ms Lendon said the growth of the sector in general is a “positive demonstration” of investors taking an interest in their retirement income.
“SMSFs form the largest sector of the Australian super industry, and the numbers are growing fast, so it’s vital that the sector remains appropriately regulated and complying,” she added.
Seems like the ATO is going down the same route as other regulators: checking that forms are filled in on time rather than checking that Trustees are actually managing their money ; i.e.have a plan, know their member’s risk profile and objectives.have a written strategy , know about realistic (historical) return rates etc.
ASIC probably ensured STORM had lodged their license forms on time yet didn’t notice that virtually 100% of Storm clients were geared.
Sensible comments from Dep Commissioner but I still think best and most important way to protect and preserve LRBAs for the long term is to mandate reasonably conservative LVR’s that make it highly likely the property is positively geared.
Also need to examine allowing related party non BRP purchases with(out) LRBA provided supported by a licensed valuation