Non-lodgement to affect property borrowing
The ATO’s recent decision to remove SMSFs that are behind in their lodgements from the Super Fund Lookup website will be a “black mark” for trustees looking to gear into property, according to one lawyer.
In September 2013, the ATO removed SMSFs that had two or more overdue annual returns from the Super Fund Lookup register until they brought their lodgements up to date.
Speaking at the SMSF Professionals’ Association of Australia national conference in Brisbane last week, ATO deputy commissioner Alison Lendon confirmed that SMSFs are still being removed from the Super Fund Lookup for their failure to lodge.
Townsends Business and Corporate Lawers special counsel for superannuation Michael Hallinan said the removal of an SMSF from the register would effectively make it a “non-person” for tax purposes.
“This can have a serious impact on the social life of an SMSF – let alone the ability to receive contributions from employers, rollovers and transfers,” he said.
“If the SMSF is trying to enter into a limited recourse borrowing arrangement it will be an impossible dream to complete the transaction with such a black mark over the fund,” said Mr Hallinan.
Because the Super Fund Lookup is not a statutory function of the ATO (rather, a mere “public convenience which the ATO provides at its grace”) there is “very little legal redress” available to SMSFs that find themselves removed from the Super Fund Lookup.
Rather than wasting time and money making legal arguments against the “non-personage of SMSFs … it may be better to avoid the situation of two or more overdue returns by lodging the overdue returns with the greatest speed possible”, said Mr Hallinan.