Contravention reporting helpful for SMSF risk profile, says big four
A Deloitte partner has encouraged troubled SMSFs to file a contravention report if they want to be taken off the ATO’s regulatory radar.
Deloitte partner Jo Heighway says contravention reporting can be a good way to let the ATO know that the SMSF is aware of its issues and is taking steps to resolve them.
“The industry tends to be, the accountants and administrators, tend to be a bit scared of contravention reporting, that it’s somehow putting the fund on the radar,” Ms Heighway told SMSF Adviser.
“Whereas the tax office seems to have an approach more that a contravention report could take the fund off their radar.”
Ms Heighway stressed that the tax office already knows when an SMSF is in trouble, therefore, not filing a contravention report doesn’t mean the problems are hidden.
“In other words, if you lodge a tax return and the tax office has the information where they’re suspicious of something and they write that a fund could be at risk of something not being right, if they do get a contravention report confirming that the trustees are aware that there is something and that something’s being done about it, it’s more likely the fund will fall off their radar,” she said.
Ms Heighway recently attended a presentation where the tax office confirmed her thoughts about the benefits of contravention reporting.
“The ATO was saying that in terms of their risk rating, when they receive contravention reports and it’s clear that the trustees are co-operating and doing something about it, that tends to be a really good way to communicate to the tax office that the fund is under control,”
Ms Heighway is hopeful there will be a shift in the way the industry thinks about contravention reporting.
“I think there needs to be a bit of a shift to looking at contravention reporting as to how we use that to give the tax office confidence that the issues are identified, that it is under control and that they’re working with someone to keep the fund on track,” she said.
“That’s where behaviour around avoiding contravention reports doesn’t make sense because actually by avoiding the reporting, you’re keeping the fund on the radar.”