ATO outlines strategies for avoiding non-compliance

Speaking at the SMSF Association conference last week, Mr Burgess said that while some compliance matters are too serious to avoid a non-compliance notice – such as those subject to wilful intent or extensive issues over an extended period of time – the ATO is trying to avoid handing down penalties through its new approach.

Mr Burgess said the phone calls from the ATO to SMSF trustees are not meant to be “We’ve got you calls”.

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“We’re not looking to do it that way, we’re actually trying to avoid a formal audit of review, but in about one in ten funds it just has to be escalated – what I mean by that is during the phone call the person will absolutely refuse to deal with us and that gives us no choice,” he said.

Trustees who refuse to help the ATO resolve the issue or are simply too difficult, he said, are therefore more likely to have their fund made non-complying.

“We know there’s an issue and we’re trying to avoid [it] but we need the [trustee] to say ‘Yes, I’m aware of it and we’re working on it’,” he said.

Super Sphere director Belinda Aisbett said SMSF accountants and advisers need to ensure the client is fully across what they’ve done wrong and how it has been resolved.

Ms Aisbett said SMSF practitioners need to have a conversation with their client about the issue so that when they receive the call from the tax office they’re actually know what they’re talking about.

“You’ve got to do the right thing by your client and manage their risks – the last thing you want is your client to get all defensive on the line with the tax office and then have [the ATO] escalate it to an audit,” she said.

“If they escalate it to an audit and they confirm a contravention, then they have to issue fines, all because of one phone call, that could have gone a different way.”

Ms Aisbett said while one unit penalty doesn’t seem like a large amount of money, the number of units attached to a contravention can make it very costly for clients.