THE ATO has long complained that a small percentage of self-managed super funds are serial offenders with their failure to lodge tax and regulatory returns.
Now the regulator is getting tougher – really tough.
Stuart Forsyth, assistant commissioner for self-managed funds, told the Institute of Chartered Accounts SMSF conference earlier this month that the ATO had begun what he called a pilot exercise, striking at non-filers of SMSF returns.
As part of this program, almost 250 self-managed funds have been issued with “pending default assessments” to tax their assets (excluding non-concessional contributions) at a rate of 45%. All of these funds have not been filing their annual returns.
Forsyth did not say whether the funds had actually been declared non-complying under superannuation law.
“Lodgment rates have improved [in general],” Forsyth told the accountants, “but too many SMSFs continue to have a poor record in this area.
“We know that many of these SMSFs remain active and have assets, but despite a number of reminder notices from us, they have still not lodged their annual returns.”
Indeed, a SMSF was recently fined $55,000 after being prosecuted for failing to comply with court orders to lodge two annual returns.
The possibility that a serial non-filer could be stripped of almost half its assets by being taxed at 45% – depending on the circumstances – is a powerful wakeup call for trustees to get their funds’ affairs in order.
It is quite a tax sting.
A considerable concern is that if trustees are not looking after something as basic as lodging their funds’ annual tax and regulatory returns, doubts must be raised about how they are looking after the funds’ investments and the retirement savings of members.
To read Forsyth’s speech, see SMSF risk and issues with reporting.
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Robin Bowerman, Vanguard Investments Australia's Head of Retail, has more than two decades of experience in the finance industry as a writer, commentator and editor.
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