ATO warns of harsher penalties for outstanding lodgments
The ATO revealed there are still more than 45,000 returns outstanding from trustees in the SMSF sector from 2021 – nine months past the lodgment date.
In part two of the SMSF Adviser podcast with ATO SMSF expert Martin Frauenfelder, he said there is an increasing number of funds failing to lodge their first return.
“The lodgment of the annual return is a fundamental obligation for all trustees, including those in the retirement phase,” Mr Frauenfelder said.
“Although the majority of say 2021 in returns have been received, there’s still a bit of work to do.
“Of particular concern is the increasing number of funds failing to lodge their first return. This population has grown significantly from seven per cent into 2016 to over 21 per cent in 2021. This equates to 5400 funds of the 26,000 new registrants during the 2020 financial year who haven’t launched their first annual return.”
Mr Frauenfelder added that 36 per cent of new funds registered during the 2022 financial year have also not met their first-time lodgment deadline.
“So there is a real concern with these first-time lodgers.”
He said the ATO is employing a number of strategies to combat the non-lodgment issue including firstly reminding trustees of their lodgment obligations by articles and targeted mailouts.
“We do see positive engagement from this approach.”
“For those that fail to meet these obligations by more than two weeks, we remove their compliance status on superfund lookup, which restricts their ability to receive rollovers and employer contributions.
“Those that still don’t engage with us, we have deployed our three strikes Red Letter campaign, and this year alone, we have disqualified about 152 trustees who have failed to respond to this letter.”
He said the ATO is now also placing specific focus on tax agents and auditors who have their own personal SMSF lodgment obligations outstanding.
“We do hold professionals to our highest standard when it comes to meeting their tax and regulatory obligations.”
“The ATO has issued red letters to this group and has commenced audits on those who have failed to respond.”
Mr Frauenfelder said he encourages anyone, auditors and trustees, who are experiencing difficulties to reach out to the ATO for assistance, rather than waiting for the ATO to contact them.
He also warned that the ATO is getting better at identifying where money has been rolled into the fund and then taken out and is taking firm action on those funds.
“The ATO is looking to amend personal income tax returns on the amounts that have been taken out and disqualifying and winding up the fund.”
