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The most common mistakes in SARs flagged by the ATO

The most common mistakes in SARs flagged by the ATO
Adrian Flores
25 February 2020 — 1 minute read

The Australian Taxation Office has revealed the top five most frequent errors made in the submission of SMSF annual returns as well as how advisers can avoid them when lodging this year.

A bank account that isn’t unique to the SMSF

The ATO said there must be a bank account in the fund’s name to manage the SMSF operations and to accept contributions, rollovers of super and income from investments.

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Further, it said the account must be separate from the trustees’ individual bank accounts and any related employers’ or advisers’ bank accounts.

“This will protect your fund’s assets and ensure super payments can be made to your SMSF,” the ATO said.

Providing an incorrect electronic service address (ESA)

The ATO said an ESA allows an SMSF to receive electronic remittance advice and contributions if it has members receiving super from non-related employers. Therefore, it’s not an email address or the contact details of the SMSF messaging provider.

“An ESA consists of alphanumeric characters with a combination of upper and lower-case characters and is case sensitive,” the Tax Office said.

Not valuing an SMSF’s assets at market value

The Tax Office noted that SMSF assets need to be calculated at market value as at 30 June to prepare the fund’s accounts, statements and SAR.

“If you follow our valuation guidelines, well generally accept the valuation you provide,” the ATO said.

“Accurate asset valuation is important to ensure your SMSF retains its complying fund status. Penalties may apply for inaccurate valuations as these can have an impact on your members balances.”

Trying to lodge with zero assets

The ATO said an SMSF is not legally established until the fund has assets set aside for the benefit of members. As a result, the regulator said it wont accept a SAR from an SMSF that has no assets unless the fund is being wound up.

“If this is your SMSFs first year and you have no assets set aside for the benefit of members, you can ask us to either cancel your funds registration or flag the SMSFs record as return not necessary (RNN),” it said.

Lodging an SAR without auditor details

An approved auditor examines an SMSFs financial statements and assesses the funds compliance with super law, meaning an audit must be completed before your SAR can be lodged, according to the ATO.

“A SAR lodged without auditors details will be suspended and not recognised as a lodgment. This will impact the complying status of the fund until the SAR is lodged with the required information,” the ATO said.

“Appoint an auditor at least 45 days before your SAR is due to ensure the audit is completed in time to meet the lodgment date.”

Adrian Flores

Adrian Flores

Adrian Flores is the deputy editor of SMSF Adviser. Before that, he was the features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at This email address is being protected from spambots. You need JavaScript enabled to view it..

The most common mistakes in SARs flagged by the ATO
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