ATO spies illegal early release patterns, readies for new crackdown
The tax office has identified a population of non-lodgers who are using illegal early release strategies, and is planning a targeted compliance campaign.
The ATO has segmented its non-lodgement population as part of its ongoing compliance focus on SMSFs that don’t lodge on time or at all.
A new area of focus on the ATO’s radar is SMSFs that are newly set up, rollover money from an APRA-regulated fund and never lodge a return.
Often, the trustees of the new SMSF are around 36 years old and a while off from retirement age.
“Through our risk assessment processes, we have flagged this as an area where illegal early release could occur,” ATO assistant commissioner for the SMSF segment Dana Fleming told SMSF Adviser.
The ATO has seen a steady increase in the population of SMSFs using this strategy over about a five-year time frame. In the 2017 financial year, about six and a half thousand funds were set up and never lodged.
Those non-lodgers can expect a letter from the ATO, and harsh penalties — including wind-up — will be applied where there is blatant disregard for superannuation law and trustee obligations.
In October last year, the ATO reported that non-lodgement rates for the SMSF sector had reached critical levels, with around 40,000 funds at risk of being made non-compliant at the time.
By February this year, the number of SMSFs who had either never lodged an SMSF return or had more than two years of overdue returns had dropped to around 30,000 funds.
