Concern over ATO crackdown on late SMSF returns

The Small Independent Superannuation Funds Association (SISFA) has expressed concern that self-managed super funds (SMSFs) that are late lodging tax returns for the 2009-10 financial year may be unfairly punished by the Australian Taxation Office (ATO).

The ATO has been meeting with tax agents around the country and formally advising that SMSFs will be considered in breach of their compliance if returns aren’t lodged by 31 August or 30 September, according to SISFA.

SISFA chairman Michael Lorimer said that for a super fund that only has its 2009 return outstanding at this stage, a threat of non-compliance if they don’t lodge by the end of August seems serious, but more importantly is inconsistent with the ATO’s own practice statement on the issue.

The ATO’s guidelines gave an example of a non-compliant SMSF as one that failed to lodge a return for three consecutive years and disregarded repeated requests from the ATO, according to SISFA.

This is a vastly different example to a fund that was late lodging one return and had not received any further notices, Lorimer said.

“If you’ve got a public document out there that sets out the circumstances under which the tax office might consider a fund to be non-complying, then you’ve got this sort of approach, they seem to be at odds and for everyone in the industry as a practitioner that’s a bit of a concern,” he said.

“You’d expect to be getting demand notices or phone calls, but for one year’s worth of returns outstanding you wouldn’t be expecting to get a notice saying you might be getting taxed on half the assets in the fund.”

While Lorimer encouraged all members to lodge on time and said the industry needed to be vigilant in all areas of compliance, this approach from the ATO was comparable to cracking a walnut with a sledgehammer, he said.

While there doesn’t seem to be a lot of science behind whether tax agents were being advised of a 31 August or 30 September deadline, from the cases seen by SISFA it appeared funds with a higher level of assets were more likely to receive the 31 August deadline, with 30 September for the rest, he said.