SuperAuditors director Shelley Banton told SMSF Adviser she is seeing a lot of cases of this happening and said there are serious consequences where these payments are not rectified before the fund is audited.
“These payments may only be small amounts, but when it gets to audit time and they’ve totalled up to quite a reasonable sum and they’ve got to be paid out of the fund within a reasonable timeframe, that’s where it’s going to be an issue,” she said.
“Sometimes it’s just an honest mistake by the trustee and obviously if you’ve got all your accounts with the same financial institution it’s easy to click on the wrong account in the drop down box when you’re banking online. If it continues to be an issue though then it can then become a compliance issue for the client as well.”
The other issue she sees, she said, is where SMSF trustees are no longer able to contribute but they’re still paying fund expenses and they’re crediting that to the pension account.
“The pension has to be paid in cash, and you can’t journalise a pension payment anymore so it’s best from a housekeeping point of view not to allow that to happen,” she said.
Holding assets in the incorrect name she said also continues to be an issue particularly where the trustee uses a corporate trustee but it is used for other entities.
“We continue to see assets such as listed investments being held only in the name of the members or the trustee names. [SMSF practitioners and trustees] need to make sure the asset is held in the name of the trustee of the super fund and also that the super fund is listed as a designated account on the assets,” she explained.