SMSF annual returns are coming up: Key considerations for those facing the deadline

For trustees that lodge their own return, the due date is 28 February. For trustees that use a tax agent to lodge their return (a more common scenario, thankfully), there is more time available, with a deadline of 15 May in most cases.

The lodgement of the annual return is the culmination of a long process of compliance and regulatory reporting. While tardy self-lodgers are now too late to tick all these boxes, tax agent lodgers still have time to get everything done before the final May deadline.

Here’s what needs to happen:

Annual accounts 

As soon as practical after the end of each financial year, the trustee must attend to a number of financial reporting requirements. These include the preparation of: 

• A statement of financial position recording the assets and liabilities of the fund as at the end of that preceding financial year, which is 30 June of the previous year.
• An operating statement recording the profit derived or loss incurred by the fund for that financial year (or part of the year if the fund was not in existence for a full year).
• Member and other statements and reports to be prepared.

An SMSF is required to maintain accounting records. These records are to be kept in a form, with supporting documentation, to enable them to be properly audited. Accounting records are to be retained for five years after the end of a financial year to which they relate.

Audit requirements

Once the annual accounts are completed, the trustees must then arrange for the financial statements and the accounting records of the fund to be audited by an independent and approved SMSF auditor, registered with the Australian Securities and Investments Commission (ASIC). They must also have a valid SMSF auditor number (SAN).

The SMSF auditor is required to review the financial statements and supporting records of the funds, and provide an opinion as to whether it considers that the financial statements provide a true and fair position of the fund.

If the auditor detects any breaches of the fund, it is obliged to report these to the ATO.

In addition, the auditor must assess the fund’s overall compliance with the Superannuation Industry (Superannuation) Act 1993 and associated regulations.

The auditor must provide the audit report before the due date for lodgement of the annual return. The return must not be lodged until the audit of the fund has been finalised.

Once the audit is finalised, only then can the annual return be lodged.

Failing to meet the lodgement deadline can result in stringent sanctions, including late lodgement penalties, enhanced trustee education requirements, and the ATO can even make the fund non-compliant. It therefore pays for advisers to give tardy trustees a push to ensure that deadlines are not missed.

Mark Chapman is the director of tax communications at H&R Block.