Don't say you haven't been warned
DEPUTY tax commissioner Neil Olesen emphasises that on one side, there are “very high rates of voluntary compliance” among SMSF trustees and he speaks of a determination by the SMSF regulator to follow a “collaborative” approach to compliance.
However in a talk he gave late last week at ASFA’s national conference, Olesen makes clear what every informed fund trustee should already know: the ATO is taking an increasingly tougher approach towards really wayward trustees in particular.
“You’ll appreciate that we’re not funded to pursue every last bit of non-compliance so necessarily we make judgments about what to do based on an assessment of risk,” he says candidly.
Olesen has provided a number of thumb-nail sketches of what particularly worries the ATO in regard to SMSF compliance.
Illegal early release schemes: “Although in the context of the whole system, the incidence of illegal early release [schemes] is small, it nevertheless represents a significant risk to community confidence as well as the retirement savings of the people induced into the schemes,” he says.
Lodgement of annual returns: 72% of SMSFs made the lodgement deadlines for their 2008-09 returns. Looked at another way, 28% were late. “We’ll be further ramping up our focus around on-time lodgements,” says Olesen. “One target has been serial non-lodgers …” Some funds haven’t lodged returns for a number of years.
Related-party dealings: “Where we follow-up high risk contraventions reported to us, or detect them in our compliance work, we usually find that the non-compliance relates to some form of transaction or dealing with a related party,” says Olesen.
Non-professional approved auditors: “Our general assessment of approved auditors,” says Olesen, “is that they’re doing a much more professional job than in the early years of the SMSF market.” And he adds, “… we see fewer instances of auditors auditing their own fund, although we still have concerns around the maintenance of independence and unwillingness by some to comply with some of their obligations.”
Interestingly, the ATO has identified some 3000 auditors who audit two or fewer funds a year. And the regulator has found that auditors who audit fewer funds tend to generally perform more poorly than others.
Olesen’s comments reinforce what the ATO has already warned SMSFs about in regard to where the regulator is currently striking and where it will strike next. (Read his full address http://www.ato.gov.au/corporate/content.asp?doc=/content/00261824.htm)
Don't say you haven't been warned.
Listen to the audio podcast:
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.