‘Flimsy’ audits in ATO’s sights
The ATO will be upping its focus on SMSF audit providers who offer cheap and automated services, with the regulator skeptical that an adequate level of processing is being conducted on these audits.
Speaking at the SMSF Association national conference in Adelaide, ATO commissioner of taxation Chris Jordan said one of the main issues the ATO sees with audits is poor-quality documentation.
“The documentation to prove they did the audit just doesn’t exist, or it’s really flimsy,” said Mr Jordan.
“And I keep coming back to those low-cost ones. With those low-cost ones how can you make a dollar? How can you make money out of a $200 audit by the time you’ve done all the processing around it? That’s a pretty difficult thing.“
Mr Jordan said these low-cost audits would continue to be on the ATO’s “risk profile”.
"I see these automated $200 online audits. What’s that about? You never meet anyone, you send some documents, and you get your certificate back. What real value is that adding?" he asked.
“What do they really do? I send you some documents and you look at it and send a certificate. Who are you? Where are you? What do you actually do, if anything?”
Mr Jordan said the ATO is conducting 59 full audits, which given the size of the market, he added, was not a bad statistic.
“At the end of December 2015 we undertook integrity checks of 2,200 newly registered SMSFs and we excluded some 300 trustees from the system and we imposed operating restrictions on a further 800 new SMSFs,” he said.
The reason for excluding the trustees from the system, he said, related to the compliance or non-compliance history and behaviour of the trustees.
“So you find examples where some trustees have withdrawn money from the fund, sort to disguise those withdrawals as loans or concealed their actions by simply not lodging returns,” he said.
“Sometimes unfortunately people have things like gambling habits and so they’ll roll money from an employer fund into an SMSF so that they can start accessing inappropriately to fund gambling debts and that.”
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Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.