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The ATO explains its SMSF compliance work

By Matthew Bambrick
10 December 2014 — 2 minute read

As the SMSF sector continues to grow in size and significance, the ATO is keen to ensure it remains compliant and well-functioning. Here, we offer some insights into our new and continuing strategies in the sector. 

Our self-managed super funds compliance work is always twofold. First, it’s about making sure that those who want to do the right thing have easy access to the information that they need. Secondly, it’s about identifying those who aren’t playing by the rules and dealing with them accordingly.

Access to information

We know that how SMSF trustees operate and get information has changed. That’s why we now offer new and more contemporary ways to help SMSF trustees understand their regulatory obligations.

Over the past few months we have been regularly publishing new SMSF-related videos on YouTube. By the end of this year, over twenty videos will be available ranging from the basics of what’s involved with an SMSF to more topical subjects such as business real property, limited recourse borrowing arrangements and paying an income stream.

In June we also ran a quite popular SMSF professional webinar series about our new compliance approach and powers. Over 6,000 SMSF professionals from around Australia participated in a webinar session and we received overwhelming positive feedback so we’ll run more webinars, likely starting in October 2014. A video from our last series of webinars along with the questions raised can be found on our website. We’re also working on making it easier to find information on our website and the ATO app now includes SMSF information.

Our new tools and services aren’t just for trustees. We want to make it easier for SMSF auditors to work with us in protecting the integrity of the system. That’s why we have eSAT, a free downloadable superannuation audit tool, to assist with their audit and reporting obligations.

We’ll soon publish a series of video tutorials for approved SMSF auditors to make sure that they are getting the most out of eSAT.

Playing by the rules

SMSF auditors play a lead role in ensuring the integrity of the SMSF sector. We depend on their accuracy and independence to provide trustees with an assessment of the financial and compliance state of their SMSFs and to provide us with information on any reportable contraventions.

In 2014/2015 we will contact about 1,000 SMSF auditors where we have concerns about some aspect of their behaviour. We will also review and audit about 165 auditors, including a small number of high-volume auditors to confirm that they are undertaking proper and comprehensive SMSF audits.

Contraventions reported to us by SMSF auditors are a significant focus of our compliance activities for 2014/2015. We will take action on every auditor contravention report we receive.

For high-risk SMSFs, this will mean a comprehensive audit of their tax and regulatory affairs. With medium-risk SMSFs we will discuss the contravention and any other relevant matters and explain our reasons for concern.

Generally, we will give medium-risk funds an opportunity to rectify issues with no penalties applied. Low-risk SMSFs will receive a tailored advice letter reminding trustees of their obligations and encouraging compliance in the future.

In an address I made earlier this year, I spoke about a number of areas of concern we are looking at in 2014/2015 in addition to our standard activities of addressing auditor contravention reports and issues found in the SMSF annual return. These include arrangements involving dividend washing, overseas seminars, home loan unit trusts and dividend stripping. We will also take a closer look at those SMSFs we think are taking undue advantage of the concessional rates of tax for complying super funds and entering aggressive tax planning arrangements.

Despite these focus areas we know that most SMSFs are doing the right thing. Each year we only receive auditor contravention reports for approximately two per cent of SMSFs, which tells us that almost all SMSFs are meeting their obligations.

Our aim is to keep working with trustees, auditors and other superannuation professionals to ensure easy access to the information they need, in the form they want it, and that the industry remains fair for everyone.

Matthew Bambrick, assistant commissioner, SMSF segment, ATO


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