An ATO Assistant Commissioner, Stuart Forsyth, recently provided an update on SMSF compliance and audit issues. Speaking at the SPAA 2012 SMSF National Conference on 17 February 2012, Mr Forsyth highlighted what the ATO considered to be “systemic” issues:
- auditor independence – During 2011, Mr Forsyth said a number of cases were identified where the approved auditor failed to identify contraventions of SIS Act. However, Mr Forsyth did note that incidences of referring auditors to their professional bodies has dropped; and
- transactions involving related parties – Mr Forsyth said the ATO will be developing guidelines to help trustees and their advisers when obtaining valuations to support the proposed new requirement for SMSFs to value their assets at net market value. The guidelines are expected to be “in place before May”.
Other issues include:
- on-time lodgment – While SMSF annual return lodgment rates have improved, Mr Forsyth said too many funds continue to have a poor record in this area. He said the ATO is considering displaying non-lodging funds on Super Fund Lookup and considering whether they should continue to be treated as complying when they are “delinquent lodgers”;
- compliance and penalties– Mr Forsyth commented on the Government’s proposal to provide the ATO with new powers to issue administrative penalties against SMSF trustees on a sliding scale reflecting the seriousness of the breach. He said the ATO expects “these powers will go a long way towards improving overall compliance and preserving retirement benefits”; and
- limited recourse borrowing – The ATO regularly scans the SMSF investment environment to identify products or schemes that may have the potential to breach SIS Act in relation to limited recourse borrowing arrangements (LRBAs). This includes attending investment seminars and meeting promoters of such arrangements, Mr Forsyth said.
[LTN 34, 21/12]