How The ATO Will Ensure You Comply
There are over 400,000 Self Managed Superannuation Funds (SMSF) in Australia and the number is growing by tens of thousands a year.
Over the last few years, since the ATO assumed responsibility for SMSF’s it has been on a learning curve ascertaining how they are run, where the money is invested and how they are managed. It has been setting up surveillance measures to gather information so as to better manage this huge number of funds and ensure compliance. After all it is simply not possible for them to individually audit each fund even every few years let alone annually.
Their surveillance has identified an increasing number of breaches of compliance rules. Many of these, probably the vast majority of them, are through ignorance rather than any deliberate flouting of the rules.
The biggest number of breaches, totalling 19.1% for the 2008 year, related to loans to members or their relations, followed by breaches of the in house assets test at 15.6% and assets not being held in the name of the trustee at 13.6%. The ATO has been endeavouring to educate trustees on their responsibilities to reduce the risk of non compliance, but are struggling against the rapidly increasing number of funds.
In an effort to stem the rising tide, the ATO has stepped up its campaign by concentrating on the activities of auditors. Every fund must be audited each year. The auditor’s responsibilities are to ensure that the fund is maintained in accordance with all laws and regulations, that the assets of the fund exist and are separate from the members own assets, amongst other things.
Where a breach is identified, the Auditor now must report the breach to the ATO.
The ATO obviously believed it is easier to manage a much smaller number of auditors than try to check every fund. After all, if the auditor fails to do the job properly they will lose their auditing capability. So if you have a SMSF, be prepared to undergo a more thorough audit than previously and to pay more for the privilege.
POSTED: 07-Sep-2009