Recent Revelations for SMSF Annual Return in 2019
Self-Managed Superannuation Funds is a good way to save money for the post-retirement stage. It is a trust fund wherein assets are conquered and utilised so as to generate money for retirement expenses. There are compliances and guidelines stated for monitoring and tracking the money, lest misused.
In regards to the compliances and guidelines, they are revised every financial return to ensure that no financial fraud is happening. Such revisions are applicable in the year 2019 at the time of SMSF Annual Return. Let us Have a Look!!
Part A Qualifications
Previously, the qualification was inquired only for Part B which means the compliance report and its qualification was nowhere mentioned. However, from 2019 hereon, Part A would also be verified for qualification. Part A is the section complying with the fact that the financial records of the Superannuation funds are correctly represented or not. Whereas Part B of the report highlights that whether or not the compliances have properly been followed or not.
If the Audit Report is qualified in either Part A or Part B regardless of the auditor’s explanation, the same should be reflected in the Return Statement. Previously, it was advised by ATO to answer as NO if the auditor qualified Part B due to the fact of non-confirmation of the information provided by the fund members.
This will help the ATO to build a more concrete risk profile of the SMSF Funds and Members. In addition, ATO will also be able to perform a risk assessment of the funds involved. There is no fund audit or review in case the auditor qualify for Part A report. However, if the members receive a qualified Audit Report from SMSF auditor, then they should rectify the same as quickly as possible. In case no remedial steps are taken, ATO holds the authority to determine the enforcement action and penalty level for such cases.
What About Limited Recourse Borrowing Arrangement [LRBA] Amount?
A new parameter has been added in the Annual Return of outstanding Limited Recourse Borrowing Arrangement, or simply as LRBA. This is for statistical purpose only which would be used to keep track of the outstanding LRBA amount for each member.
In case of outstanding loan balances for LRBAs, the same should be reported immediately as per the proposed editions for total superannuation balance. The amount reported would not be used while calculating an individual member’s superannuation balance. ATO will accept any reasonable technique for amount calculation. One such acceptable method is listed under Subsection 307-231 (3) of Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018.
How Would ATO Calculate CryptoCurrency Investments?
With changes in SMSF compliance, reporting, and auditing, there is also an updation regarding cryptocurrency to be reported in Assets Section for 2019 SMSF Annual Return. Previously, this amount used to be listed under “Other Overseas Assets Label” but would now be reported under specific Cryptocurrency Label.
According to Wikipedia, Cryptocurrency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. This is an investment vehicle which is used to verify the blockchain transactions. It generally operates independently of any central bank, central authority, or government across the globe.
For SMSF Annual Return, the Cryptocurrency is generally referred to as Bitcoin or any other digital or crypto entity with similar characteristics to Bitcoin. The characteristics that Bitcoin follows is listed under TD 2014/15.
How About Downsizer Contributions?
With the new updations in SMSF Annual Returns 2019, the members who have imparted Downsizer Contribution would also be enlisted.
Summing Up , On the overview of the SMSF services and its benefits, it has been noticed that more and more of Australian Citizens are turning their heads to the same. On the other hand, ATO is pulling its socks up to prevent any financial fraud and secure the individual’s hard-earned money.