Audits on early super release need ‘common-sense’ approach
A common-sense approach should be taken to auditing SMSFs seeking to use the government’s early access to superannuation scheme that doesn’t place more pressure on trustees while also ensuring regulatory compliance, says a leading SMSF audit firm.
Under the scheme, members with sufficient balances will be allowed to apply for early release of up to $10,000 in the 2019–20 financial year through the myGov website on 20 April.
The second payment of $10,000 will be accessible from 1 July 2020 and members will have until 24 September to apply.
Members must satisfy the following strict criteria to be able to access an early release of super:
- They are unemployed.
- They are eligible to receive a JobSeeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance.
- On or after 1 January 2020, either:
- they were made redundant;
- their working hours were reduced by 20 per cent or more;
- if they are a sole trader, their business was suspended, or there was a reduction in their turnover of 20 per cent or more.
ASF Audits executive general manager of technical services Shelley Banton said the entire scheme is based on members self-assessing to confirm eligibility for early access of their super.
Also, she said they are not required to attach evidence to support their application on the myGov website, but they are required to retain records and documents for future proof.
Requirements and evidence of documentation
Ms Banton noted that auditing funds for the 2020 and 2021 financial years will result in SMSF auditors seeing transactions of up to $10,000 classified as COVID-19 early release for the first time.
As a result, SMSF auditors will have to confirm the amount taken meets the COVID-19 early release criteria where the member does not meet a condition of release.
“SMSF auditors are not interested in finding out the personal circumstances of members but are required to obtain sufficient appropriate audit evidence to support their audit opinion,” Ms Banton said.
As for what constitutes acceptable evidence, Ms Banton said SMSF members are encouraged to ensure they keep all evidence and documentation in line with ATO requirements.
While she said this should be acceptable audit evidence, providing approval from the myGov website or a declaration signed by the SMSF trustee may also be sufficient.
“Without being too prescriptive, there may be more changes on the way which will affect these requirements,” Ms Banton said.
“Any other course of action for SMSF auditors, such as accepting a $10,000 withdrawal at face value, can only be done through the discretion and instruction of the ATO.”
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.