ATO to look closely at SMSF compliance

The AustralianTaxation Office (ATO) has developed a hit list for self-managed superannuation funds (SMSF) and it will be looking very closely at the general operational compliance of the funds.

“If you can’t get the basics right, then the ATO will think you are not getting the other things right,” says BT Funds Management senior technical manager Deborah Wilson.

“Make sure you are doing the right things, including paying the levies when they are due.”

Capital gains avoidance strategies are also on the ATO’s hit list, says Wilson.

These include internal rollovers and forfeiture strategies.

“The forfeiture strategies are complex and not to be undertaken without seeking specialist advice. The tax office has these firmly in its sights,” Wilson says.

Complying pensions are also going to be scrutinised by the ATO and this includes aggressively building reserves for estate planning purposes. The solvency of self-managed funds and their ability to meet all claims is on the list, Wilson says.

Re-contribution strategies are another area the ATO will be looking at and contrived arrangements will not be favoured. Wilson says multiple recontributions and borrowing to recontribute will be looked at carefully by the ATO. Again, she suggests it is important to get the advice in order and to phrase the advice appropriately to avoid problems.

Despite the warnings, Wilson says self-managed funds are still very flexible investment vehicles.