Sent: 24-02-2009 15:51:01
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ATO talks SMSFs
Last Friday I heard Neil Olesen, the ATO's Deputy Commissioner of Taxation for Superannuation, speak at an Institute of Chartered Accountants SMSF Conference.
Many of the points he made were very interesting and below I provide a summary:
- The number of SMSFs being set-up seems to be 20% higher than 12 months ago; anecdotally the number of funds being wound-up also appears to be higher
- The ATO now has about 200 compliance staff. In the 2007 year they reviewed some 3,500 SMSFs; in the 2008 year, 10,000 funds were reviewed and they are on track to look at 11,000 in the 2009 year
- This year they plan to continue releasing SMSF rulings. Two new ones for this year are of particular importance - super funds carrying on a business and legal personal representatives
- SMSF Rulings are not legally binding but the ATO intends to begin issuing Product Ruling type documents to organizations who bring transactions they wish to market to SMSFs. This would give these transactions a firmer footing
- The ATO expects all SIS contraventions to be reported for the first 15 months of a super fund's life and it intends to follow-up on all these. It has writing to 2,500 new trustees testing their knowledge. Thus far 42% of trustees have responded
- In the 2008 year, SMSF auditors reported 6,500 breaches. Thus far in the 2008/09 year, over 3,000 breaches have been reported. The top three breaches are loans to members or relatives, breaching the in house asset rules and assets not in the name of a fund's trustees. Breaches caused by not satisfying the minimum pension payment standards will be treated sympathetically. Those who breach the in house asset rules will need to work out a rectification plan in accordance with the super laws (the ATO does not plan to grant any extension to the legislative rectification time-frames)
- Thus far in 2008/09, over 50 funds have been made non-complying. Twenty-four were made non-complying in the 2008 year
- 94 trustees have been prosecuted for lodging their returns late. The courts issued more than $200,00 in fines to these people. The largest being $20,000 for one trustee.
- 98% of funds use tax agents to deal with the ATO
- There are approximately 11,000 SMSF auditors. Amazingly 25 per cent of these audit less than one fund. Over a half audit five or less SMSFs. Some auditors have actually audited their own fund or their relative's fund!
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