“Generally, late lodgement indicates perhaps illegal early access, or compliance problems, and the ATO is adopting a targeted compliance approach in 2025–26 because the general consensus is that the things it’s done to date are not working.”

Formica said that if an SMSF is late in lodging its annual returns, it could have its details on super fund look-up changed or removed, which restricts contributions and rollovers.

“Essentially, the ATO is just reminding people that if they have outstanding returns, that the sanctions could include disqualification of the trustee, and that’s a very significant risk these days,” she said.

“If you do receive a letter out of this targeted compliance approach, perhaps don’t just put it in the drawer like because under the traffic-light system the ATO has, if your returns continue to be outstanding, I would absolutely get on the front foot, as these days it’s quite possible the ATO is going to take a much faster, harsher approach with late lodgement.”

Formica said that, regarding trustee declarations, since 2007, trustees have been required to complete the ATO trustee declaration within 21 days of becoming a trustee or a director, and to retain it while they remain a trustee or for 10 years, whichever is longer.

“There’s been a bit of confusion on this point, because the ATO has advised that for an auditor to comply with their obligations, they’re actually supposed to sight the original trustee declaration and keep a copy in the audit file, and then get annual written confirmations that the trustees are continuing to retain that declaration,” she said.

“That is obviously contrary to standard auditor practice. Most auditors aren’t actually sighting the original trustee declaration. They’re reviewing copies of it and then confirming retention and simply requiring a new trustee declaration to be completed when one was lost, for example.”

She continued that the ATO has now confirmed for auditors that if someone audits a fund and those trustee declaration requirements are not met, and the auditor can’t sight the original, they must lodge an auditor contravention report.

“However, if it’s a once-off breach, and if the trustee signs a new trustee declaration, that will rectify the breach and will meet the record-keeping requirements going forward,” she said.

“The auditor can then report that the breach has been rectified. There really shouldn’t be a situation where there are auditors lodging ACRs each and every year for the same self-managed superannuation fund because they weren’t able to sight the original of the trustee declaration.”