Search

Hundreds of SMSF ABNs cancelled by the ATO

Updated: Jul 17, 2019


Almost 700 SMSFs have had their ABNs cancelled by the ATO. This follows the implementation of the ATO’s risk model for SMSF establishments. They are also keeping a close eye on tax agents connected with problematic SMSFs.

As part of this program, the ATO applies an analytical model to all SMSFs at the time of set-up, which can identify whether there are any risks or red flags with the individual setting up the fund.

ATO assistant commissioner Dana Fleming said that out of the 26,000 SMSF registrations in the last financial year, 2,100 were flagged for additional reviews. Of those additional reviews, 681 had their ABN cancelled, and 336 had their details withheld from super fund lookup. The ATO says this process is to ensure that SMSFs are being set up for the right reasons and are genuine. They are looking at:whether the SMSF trustee’s financial history is up to scratchif they have been bankruptif debts are owed to the ATOwhether they have a good compliance history with the ATO. Fleming also warned that the ATO would be closely looking at the associates of the super fund, including the tax agent: “We are looking at whether the tax agent associated with the SMSF has a poor history and whether they are linked to previous SMSFs that have been of concern to us.”

The way SMSFs are set up can also indicate poor behaviour and raise flags, particularly with: lack of care in which the fund was set upincorrect member detailswrong financial structureSMSFs assets not separate from individual’s assets.The ATO have said that if red flags appear, they will be interviewing the trustee.


ASIC cracking down on auditors


An alarming report from ASIC reveals that 155 SMSF auditors have been removed from the register by ASIC, in the 2017/18 financial year.

ASIC has stated in their report that 117 of these was for failure to lodge annual statements and 12 were disqualified was for failing to comply with auditing standards, breaches of independence requirements or fitness and property matters.

Common reasons ASIC took enforcement action:Failure to meet auditor independence requirements i.e. auditing their own funds, a family member’s funds, a business partner’s funds, or funds which they were responsible for preparing accounts or financial statements.Failure to comply with auditing standards through inadequate planning, performing audits poorly, obtaining insufficient audit evidence and not adequately documenting audit work. In one particular case, ASIC disqualified an SMSF auditor who was breaching independence and auditing standards, after he audited his business partner’s funds. He also made false representations in annual returns for his own SMSF, saying that the fund had been audited when it hadn’t.

ASIC commissioner John Price said as gatekeepers, auditors are expected to adhere to the highest standards in the performance of their role and warned that ASIC will continue to take action where the conduct of SMSF auditors is inadequate.

Imagine the issues this would cause if the 3 yearly audit cycle was introduced. More auditors who are not doing the right thing will cause further issues for trustees. This will ultimately undermine SMSF integrity and decrease audit integrity.

Ensure your practice is using a trusted, Australian based auditor.

For more information please contact Saul SMSF.

2 views

Liability of the Director(s) is limited by a scheme approved under the Professional Standards Legislation

Developed by

Logo Icon Only.png

SAULSMSF © 2020 • PRIVACY POLICY