The status of tens of thousands of SMSFs currently hangs in the balance, with the post-reform environment prompting the ATO to threaten axing funds which are not meeting their reporting obligations.
The advent of changes such as the transfer balance cap requires the tax office to have significantly more up to date data on a fund’s assets and activity, pushing on-time lodgment further up the ATO’s compliance hit list.
About 40,000 funds which have not met their lodgement obligations are now at risk of being made non-complying, the ATO’s outgoing superannuation director Howard Dickinson said.
“I assume that all of you know non-complying outcomes, but I shall re-state it for the purpose of being very obvious: 50 per cent of the fund goes to the government, good bye,” Mr Dickinson told delegates at the SMSF Summit in Adelaide last week.
“We don’t want to make these people non-complying and we don’t want to disqualify them. But we cannot allow a significant number - about 40,000 funds with over $600,000 - of the population to continue to think they are operating as a fund,” he said.
"Non-reporting by SMSFs is a significant issue. It’s been a bad thing. With the advent of the retirement phase reporting in relation to the transfer balance cap... it’s become a bad thing times 10," he said.
Professionals with clients who are struggling to meet those reporting obligations should engage with the ATO early. Though the ATO may not always be able to assist, Mr Dickinson said voluntary and early engagement boosts a client’s best chance at a favourable outcome.
The ATO has a voluntary disclosure service for clients, which you can access here. This service was launched in May 2016, after being first announced by sister publication SMSF Adviser in November 2015.
Clients who are not suited to managing their own superannuation should also be removed from the system before ATO intervention, Mr Dickinson said.
“You are the circuit breaker. We see it, but we often see it too late. Like a year [or] a year and a half later,” he said.
“It’s you that can help an SMSF trustee with that great piece of knowledge they’ve learnt at the pub, we don’t see it, they don’t tell us,” he said.
By: Katarina Taurian
25 OCTOBER 2017