The ATO has provided a report on compliance outcomes in 2015-16 and focus areas for 2016-17. Speaking at the Tax Institute’s National Superannuation Conference on 25 August 2016, Assistant Commissioner Kasey MacFarlane discussed the following topics:

  • Compliance outcomes in 2015-16 reflect an increasing use of new compliance enforcement tools available to the ATO since 1 July 2014. During the course of 2015-16, the ATO saw a 38% reduction in the number of funds with enforceable undertakings. Conversely, the number of rectification directions the ATO issued increased by 70%.
  • Focus areas for 2016-17 – The ATO’s approach in 2016-17 will see “some key shifts in emphasis” both in terms of the activities it undertakes and the levels of enforcement action it will apply, Ms MacFarlane said. Key focus areas include:
    • supporting trustees who are willing to engage with the ATO to self-correct and rectify regulatory issues in their fund;
    • bringing more effort to its compliance activities and enforcement actions in cases where trustees won’t engage with the ATO and/or are deliberately and persistently not complying with their obligations or are operating outside the system;
    • bringing more focus to activities that review and assess the independence and quality of SMSF audits;
    • building on strategies aimed at trying to help prevent non-compliance or other issues for SMSFs.
  • Regulatory issues identified in auditor contravention reports– The ATO still considers every ACR that is submitted, but under some circumstances its response will change, said Ms MacFarlane. Previously, following the receipt of an ACR if the ATO assessed a fund as high risk, it would automatically select it for a comprehensive audit. However, this year the ATO will be changing its approach. Instead, where trustees are willing to engage with the ATO, they will be supported to self-correct and rectify compliance issues through the early engagement and voluntary disclosure service and/or from targeted mail outs.
  • Emerging issue – SMSFs directly or indirectly involved in related business ventures – The ATO has found a small number of cases recently whereby SMSFs have become either directly or indirectly involved in business undertakings, commonly property development enterprises. While noting that an SMSF can undertake a property development or other business venture, Ms MacFarlane said “significant caution” is required to avoid SIS rule breaches. In particular, the general prohibition on borrowing by SMSFs, the related party rules and rules about non-arm’s length transactions as well as the sole purpose test. She said this was an area that the ATO will “continue to monitor closely”.
  • Other topics discussed include: non-lodgers; tax planning arrangements; Super Scheme Smart initiative; collectables; and SMSF auditors and the broader integrity of the SMSF sector.

[LTN 168, 31/8/16]