ATO to beef up SMSF compliance
The Australian TaxationOffice (ATO) is set to spearhead several initiatives to address the burgeoning number of self-managed superannuation fund (SMFS) trustees who flout their legal obligations and the number of auditors who fail to report this.
Speaking at the Self-Managed Super Fund Professionals Association of Australia National Conference in Brisbane today, the commissioner of taxation, Michael D’Ascenzo, acknowledged that the rapid increase in SMSFs in Australia had posed several major problems for the industry, which, if left unchecked, could seriously compromise Australians’ retirement savings.
He said that many trustees, particularly the newer ones, did not fully understand their legal obligations and many auditors are not doing a good enough job at enforcing them.
“The issues highlight the fact that one of the main motivators for establishing these retirement savings vehicles — desire for flexibility and control over the investment of assets — is not always being matched by higher levels of accountability.”
D’Ascenzo pointed to a recent ATO survey that highlighted major gaps in new trustees’ knowledge, raising questions about their ability to meet their obligations.
He said common breaches included prohibited loans, the inclusion of non-allowable assets within funds, exceeding the cap on concessional contributions and illegal borrowing.
D’Ascenzo also acknowledged that even when breaches are detected, there is typically an unacceptable delay in rectifying them.
“[I]t is of concern that 25 per cent [of reported breaches] are only actioned after the ATO has followed up with the fund and 25 per cent still fail to rectify despite our contact.”
He said additional government funding has enabled the ATO to beef up its efforts to ensure SMSFs comply with the law and auditors meet their responsibilities.
These measures include carrying out an extra 6,600 reviews and audits of SMSFs this financial year and reviewing and auditing about 900 approved auditors, some of whom D’Ascenzo said fail to follow even basic auditing standards.
D’Ascenzo said the ATO had worked with industry experts to develop a SMSF start-up kit, which it will give to all new trustees, as well as a booklet entitled ‘How your self-managed super fund is regulated’, which it plans to release in the next few weeks.
He said the ATO would also implement special compliance checks to ensure trustees understand and meet their legal obligations and unveil a more user-friendly and practical website.
Recommended for you
AMP is to launch a digital advice service to provide retirement advice to members of its AMP Super Fund, in partnership with Bravura Solutions.
Unveiling its performance for the calendar year 2024, AMP has noted a “careful” investment in bitcoin futures proved beneficial for its superannuation members.
SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024, finding the year achieved “strong and consistent positive” returns.
The second tranche of DBFO reforms has received strong support from superannuation funds and insurers, with a new class of advisers aimed to support Australians with their retirement planning.
