ATO tweaks SMSF return rules

As foreshadowed in recent months, some of the rules for SMSFs without assets at 30 June have been officially adjusted.

The new rules enable SMSFs that didn’t have assets during the first year it was registered to flag the SMSF’s record as return not necessary.

SuperConcepts general manager of technical services and education, Peter Burgess, said the issue in the past was that the ATO’s systems would not accept an annual return for an SMSF without any assets, unless the return was for the year in which the fund was being wound up.

“What they’ve announced is that they’ve revised their criteria for SMSFs requesting a return not necessary classification. What they’ve said is that if it’s in the first year that the fund is registered and the fund doesn’t have any assets in that first year, you can apply to the ATO to have a return not necessary classification put on that fund,” Mr Burgess said.

“That will then prevent any follow-up action being undertaken by the ATO because without that status, it has the return not lodged status on the fund which may result in some follow-up action being taken by the ATO to try and chase that return.”

However, in order to apply for a return not necessary classification, the trustee needs to confirm in writing that although registered, the fund had no assets and did not receive contributions or rollovers in the first financial year of its operation. The trustee also needs to have documentary evidence of the date the SMSF first held assets and commenced operating, and confirm that the fund will be lodging future returns.

“So it may not have had any assets at 30 June but it does now have assets and you need to be able to prove that, typically by being able to provide a copy of the fund’s bank account [statement],” Mr Burgess said.

“You can’t say, ‘Well my fund didn’t have any money on 30 June and still doesn’t have any money but I’m going to apply to the ATO to have a return not necessary classification on my fund’ ... that won’t be accepted.”

The ATO said on its website that if the trustee wants to flag the SMSF record as return not necessary, the SMSF must confirm in writing that it will be lodging future returns.

The ATO said it is currently contacting trustees of newly registered SMSFs that have not lodged an annual return and where it has no records of them holding assets.

“If your clients receive a letter, advise them that we will cancel their registrations if they have not taken action as stated in the letter, lodged an annual return or applied for a return not necessary,” the ATO website states.

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