In an online update, the ATO explained that a new strategy adopted with its mailout for SMSF auditor number (SAN) misuse in September has resulted in higher rates of SMSF auditor number misuse being detected.
“As part of our new strategy, in September 2021, we issued each auditor with a list of SMSFs that lodged an SMSF annual return (SARs) for any income year that reported them as an auditor with an audit completed date between 1 July 2020 to 30 June 2021,” the ATO stated.
“As a result, we detected more SAN misuse than in previous mailouts with more than a third of instances of SAN misuse relating to SARs that were lodged late.”
The most recent data released by the ATO shows that auditors have reported 1,896 instances of SAN misuse from the latest mailout, with 1,230 instances relating to SARs for the 2020 income year and 481 instances relating to SARs for the 2019 income year.
The ATO stated that SAN misuse was connected to 683 tax agents and 24 trustees.
Out of the tax agents linked to SAN misuse, 411 were connected to one instance of SAN misuse, while 50 tax agents were connected to more than five instances of SAN misuse involving 812 funds.
The ATO warned that it takes SAN misuse seriously and that where a tax agent is found to have misreported SANs across multiple funds or multiple years, it may refer them to the Tax Practitioners Board or for criminal prosecution.
The ATO previously reported that there were 1,315 instances where funds did not correctly report the auditor number on their return for the 2019 income year.
In 2021, a Perth-based tax agent had his registration terminated after he lodged 125 self-managed superannuation fund annual returns before audits were completed.
The 125 SMSF annual returns were lodged over a nine-year period, under certificates that falsely stated that the funds had been audited prior to lodgement, and dishonestly included the name of the auditor and the date of the audit.
The TPB, which was referred to the issue by the ATO in 2019, also found that eight funds had not been audited for 10 years or more.
ATO assistant commissioner, SMSF regulatory branch, Justin Micale previously stated that in the last three years, the ATO had invested heavily in identifying instances of SMSF returns being lodged where auditor details have been entered incorrectly or the audit has not been undertaken.
Why not 3. Regulator does not enforce anyway.
Perhaps some tax agents take on too much work, or more than they can actually do. But that is a skill any self-employed person should have – the ability to plan and schedule the work. Accountants who represent that they can help other businesses to do better really need to have their own house in order.
“Desperate men do desperate things” .
I doubt any tax agent would do this to pocket the audit fee for themselves, it’s no doubt the lodgement deadline pressure gets to them. The fear of being late, losing the clients and their livelihood must be overpowering.
While the ATO may think 10 &1/2 months is sufficient to get to lodgement, consider that some managed funds/platforms/listed trusts don’t release tax statements until mid November. Then there’s Xmas so half of Dec & Jan is lost, a plethora of public holidays & Easter. Getting work signed then sending to an auditor chews up another, so It’s barely a few months to get the work done signed and audited by May 15.
Of course there is no excuse for SAN misuse, but perhaps SMSF lodgement needs a new perspective. Not long ago, the Government mooted 2 year SMSF audits, instead of annually.
Why not allow an SMSF 2 years to lodge?