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ATO flags concerns with lodgement rate for 2019 return
With the lodgement rate still sitting at 84 per cent for the 2019 annual return, the ATO is concerned that some of the funds yet to lodge may have other compliance issues in their fund.
ATO assistant commissioner Justin Micale said that while the ATO understands that the COVID-19 restrictions are continuing to have an impact on the lodgement behaviours of some SMSFs, the lodgement rate for 2019 SMSF annual returns are still tracking around 84 per cent.
This is despite the due date for the 2019 return being deferred to 30 June 2020, he said, speaking at the SMSF Adviser Technical Strategy Masterclass.
“We definitely have some ground to make up there. Our message is simple, if trustees are experiencing difficulties with lodging outstanding returns, they should contact us before we take action,” Mr Micale cautioned.
Mr Micale said the ATO considers SMSF annual lodgement to be a fundamental compliance responsibility for all trustees as it provides the regulator with visibility over the fund’s compliance with its regulatory and tax obligations.
“We have found that when an SMSF stops lodging, this can also be an indicator of broader compliance issues. Having said that, we do understand there can be other factors at play,” he stated.
He reminded trustees that where they fail to lodge on time, the ATO will automatically change the status of the fund on superfund lookup.
“This involves us updating the status of an SMSF on super fund lookup to regulation details removed, and having this status in place means that APRA funds won’t be able to roll over any benefits to the SMSF, and employers won’t be able to make any super guarantee contributions for the SMSF members,” he said.
“This status will remain until all outstanding lodgements are received. Our clear observation is that when an SMSF stops lodging, it often means the fund is having issues meeting some of its other obligations.”
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
It is very likely that the reason for the late lodgement is due to the trustees. I have SMSF clients where we have to resend documents to sign, constantly chase up for that one bit of auditor information that the trustees will send you 'today'. 2019 brought in an emphasis on auditors requiring to sight a current investment strategy. This was a hold up for quite a few audit reports as the trustees don't understand what it is, don't want to pay a financial planner to do it, and put it in the too hard basket. It took over 18 months for one of my clients to finally produce an investment strategy. Yes, covid produce a lot of extra work but I don't think that is the sole reason for the late lodgers.0- 84% is appalling and to blame Covid19 is a joke. The first lockdowns occurred some 6 weeks before the 15 May deadline. If Covid19 has had a big impact for 2019 accounts what the hell is the number going to be for 2020!!!0
- "and work coming through in a decent standard and let me assure you on average this is not the case!"
Here's a great idea I have for you, don't accept work from the half of your tax agents that are incompetent. Trust me you'll be a far happier auditor than you are now.0 - Haha true Ted, I have had several instances of accountants doing SMSF's not knowing TRIS' no longer get ECPI - so they have set up a pension giving incorrect tax advice which is also likely financial advice.. Some very very basic things and they have no idea. SMSF Auditor Association should start hitting out at this tripe accountants deal up to auditors. A lpart of the problem is these cookie cutter wafer thin margin houses which have cannibalised the industry putting pressure on suburban accountant firms to cut costs to stay competive.
0 - Points well made Ted. I’m a Tax Agent and disgusted with those appalling stats. I spend my life sweating over and meeting the deadlines that are in place. To know that 100,000 funds don’t adopt the same approach is disheartening.0
- And how many SMSF trustees to you chase up? You will always get those trustees that put your queries (and the auditors) in the too hard basket which means you are constantly following up. We can't force clients to give us information. How many accounts go out for signing and take months to come back?
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- Why doesn’t the ATO target laggard Tax Agents and start naming names of those who are now 6 months overdue? This in itself is mind boggling. This now means all those funds should be 31/10 lodgers for 2020 yet that date has also passed. With the new amendments they will need to be prepared 45 days prior for 2021 so mid-September. There is a big problem brewing for some firms yet all we do is talk about it and express concern. Almost 100,000 funds not lodged. That’s unacceptable.0
- You mean targeting the trustees right?? It's a trustee obligation to get the accounts prepared and audited. Do people really think tax agents are taking 6 months plus to prepare the smsf accounts? Just holding onto them and telling the client 'yeah sure they are nearly done'. Why on earth would we want to drag out invoicing the job for that long. Yes we have been busy but I don't believe it's out fault that the SMSF has outstanding lodgement for 2019. Gees0
- Auditors are being actively reviewed and investigated but at what stage does the ATO in its infinite wisdom not start doing the same on these delinquent Tax Agents??? And Tax Agents in general! I am appalled and disgusted by the double standards of Tax Agents being allowed to operate in the manor they do - there may well be be far more incompetent and dodgy Tax Agents out there than SMSF Auditors. Let's not forget SMSF Auditors rely on the cooperation of Tax Agents and work coming through in a decent standard and let me assure you on average this is not the case!0
- Dodgy Tax Agents are responsible for the outstanding 2019 tax returns? I think it's more the fault of the SMSF trustees. I don't think covid is the issue at all. Many funds are outstanding simply because the trustees do not respond to accountant queries or auditor queries. Auditors are asking for more information and questioning more things such as when was the last investment strategy done. It's the trustees that are not responding to these queries, no the tax agent. I had one client that took 18 months to get an investment strategy to me for the auditor. Certainly not my fault I gave up requesting it after the tenth time!0
- The ATO increased our tax practitioner work load significantly with cash boost, jobkkeeper 1, jobkeeper 2, and add super amnesty, quarterly BAS, monthly BAS/IAS - on top of the usual annual influx of individual tax returns 2020 - the pressure is endless. I'm guilty of 10% of my clients I haven't finished 2019. x20 with 2 or more years. My fault. I simply can't stretch myself further. Small practice is hard to find, then economically justify an additional labour help. So I just keep going, juggling 2020 with the overdue work. ATO work with us. 99% of practitioners are not dodgy, just juggling many tasks whilst trying to keep our tax practices viable, and efficient. Most of the ATO employees would not know what it's like to run your own practice. We'll get there. It's only tax after all, not open heart surgery!!0
- I wholeheartedly agree. I have a small practice in Southern Tasmania with 4 staff & myself and have found exactly the same with unlodged 2019 returns. We can only do one task at a time and must ensure the continued wellness of each member of the team. Yes it is only tax and we will get there :)0
- Not to mention the unsettling of the business community in general, and the demands that that places on advisors. I am in Vic - we've been on lockdown & a closed business for months, and not yet open still. I am not complaining - the public health risks are too great; however, the impact on my practice' ability to complete work in a timely manner has been significantly and negatively impacted. On a macro level, we've surpassed benchmark; on a micro level we've not been quite so successful. Yet the juggernaut that is deadlines continues to roll on, and effects compound automatically. It's Sunday; I'm working; sez it all really....
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