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Catching up on overdue super fund returns

The Australian Tax Office has warned it is about to get tough with SMSF trustees for failing to comply with the strict compliance rules.

If your SMSF or DIY super fund has fallen behind, don’t panic. The most serious penalties are reserved for cases of fraud.

But you need to take action now and show the ATO that you are trying your best to catch up.

In that way, you will avoid the worse case scenario. The ATO has the power to deem your fund a non-compliant fund and seize up to 45 per cent of the total assets accumulated in your fund.

Jarrod Rogers, director of Beyond Accountancy, suggests the best place to start is to get in touch with the ATO and let them know you are co-operating.

“If you contact them and let them know you are in the process of catching up, then they are not going to get tough with you as they would with funds that just ignore their warnings,” says Jarrod.

“If you are on the front foot with the ATO and take the initiative, then you are much better off. When our clients have been given a reminder letter by the tax office, we contact the ATO straight away and let them know it is our intention to get up to date. They won’t take any further action in the period.”

In many cases, the hardest part for trustees is taking the first step of contacting an accountant. The relief of getting started often feels better than the the point at which the final document is actual lodged.

“Doing something is better than doing nothing. All the pressure can be released straightaway and you avoid a lot of stress,” says Jarrod.

The ATO is warning that unless trustees get their lodgment obligations up to date, they will no longer be listed on Superfund Lookup, the official list of super funds.

Employers should check Superfund Lookup before making contributions to your fund. If they can see that the fund is not eligible to receive contributions, then they will have to pay the super contributions into another fund.

External superannuation funds will not complete a rollover into a SMSF without confirmation from Superfund Lookup that the fund is eligible to receive rollovers.

**Beyond Accountancy offers online consultations, as well in person consultations. We can assist trustees in any jurisdiction in Australia.


What do you need to do to catch up on late super fund returns?

You have to lodge the 2013 returns with the ATO by the end of October 2013. To do that, you need to appoint a tax agent and prepare financial statements.

What are the penalties for late super fund tax returns?

The late lodgement fine is up to $850 per lodgement. If you owe tax as a result of lodging, you will have to pay 10 % interest on any tax you owe, backdated to when you should have paid it.

Super funds have special tax concessions not available to individual and businesses. If you lose the tax concessions by being deemed non-complying, you can be fined up to 45% of the assets of the fund.

What if I have a non-operating SMSF or DIY super fund?

You need to let the ATO know that this is the case and take steps to wind up the fund. If the fund continues to operate, then the ATO assumes that you are subject to all the relevant strict rules and liabilities.

What is involved in a super fund audit?

Every fund must be audited every year. The audit must be independent of the trustees and the accountant who oversees the fund. The audit checks that the figures are correct but also goes through the super fund rules in detail to make sure the fund has complied.

For instance, it is a major breach to withdrawal money before retirement or to lend money to members of the fund or their relatives.

The auditor can also go as far as checking whether you have maintained the correct financial records. You are required to keep them for 10 years. The investments must also be in the correct name as the super fund.

What is Superfund Lookup?

Superfund Lookup is a public register of super funds which the government maintains. Employers and other third parties can use super fund lookup to:

  • identify whether a fund is complying, non-complying or non-regulated
  • identify whether a fund has ceased to operate
  • access contact details for the fund
  • The register includes both SMSFs and other public super funds.

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