ATO Stricter in Late Lodgements

The late lodgements of SMSF have been a key focus in compliance for quite some time. While ATO addressed this concern, they have ramped up their approach for withholding Superannuation Fund details from SuperFund Lookup. Since previous months, ATO has become quite active in terms of registration details removal from SuperFund Lookup in the instances wherein the SMSF trustees have failed to lodge the funds and its details for more than 2 years.

Who are the Victims?

When these types of things happen and circumstances are created, it is always the end-clients who face problems. It may even happen that they stop receiving the SuperStream Contributions all of a sudden. This may involve clearing through the contributor’s or rollovers done, particularly in case of rolling-in and rolling-out or APRA-regulated funds. After all the lodgements are in place, a minimum of 21 days may be taken by the ATO to set all the details back in place.

This is a piece of good news for the funds wherein all the transactions are sorted out but problematic news for the ones wherein transactions are already pending.

For quite a time, ATO was monitoring the late lodgements records for the past several years. The first time that ATO issued a warning regarding late lodgements dates back to 2014. Post-launch of the program, ATO has noticed a significant reduction in the number of non-lodgers across SMSF Trustees and members. The number is as significant as from 87,000 to 60,000 which has been considered this February.

The ATO holds the authority to take stern action against the SMSF professionals who fail to keep up the obligations. Also, the Tax Office is taking action against scores of tax agents and SMSF auditors with outstanding SMSF lodgement.

What ATO Says?

In a recent statement by ATO, the SMSF details with overdue returns of more two years older will be removed from the SuperFund Lookup and they will not be renewed until they bring their lodgements up-to-date. According to ATO, “This year, we are focusing on newly registered SMSFs, encouraging on-time lodgement of their first return. For SMSF who fall into this category and who are not operating in their first year, we may issue a ‘return not necessary’ (RNN) indicator.”

The ATO also stated that they are investigating and analyzing the details of SMSF wherein no details have been lodged before.

“Where we have evidence that the fund is operating we will remove the fund details from Super Fund Lookup and refer them for compliance action for non-lodgement. Where there is no evidence of the fund operating, we intend to cancel their registration.”

According to ATO commissioner Ms. Dana Fleming, “Around 30 percent are now up to date, so I’m confident that this portion of the population is going to get back on track. We take non-lodgement in this population very seriously because of poor compliance history from our data is correlated with poor client compliance history.

This is why they’re our first cab off the rank. We’re also contacting the balance of the population and asking them to bring their overdue lodgements up to date, and in the interim, because this is an agent population we have taken their funds off Super Fund Lookup so they can no longer receive any contributions or rollovers.

I want to reiterate how critically important we see the lodgement of an SMSF’s annual return being on time. This is a fundamental obligation of trustees. The good news is that 86 percent of SMSFs do lodge their returns on time, and that is a higher percentage than the rest of the population. Following the ATO’s activity in this area, over 1,000 late returns were lodged by tax agents.”

Summing Up, when the SMSF compliance is gearing up with various updates and other editions in rules, the advisors would be in search of a right SMSF compliance provider.

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