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Self Managed Super Fund (SMSF) Article
ATO Research Questions

By Tony Negline.

This article may be out of date.

6th February 2008

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It is always tempting for SMSF trustees to ignore their legal requirements.  Many trustees seem to believe that if they muck things up the only people they penalize is themselves and their relatives.

Unfortunately governments of all persuasions don't agree with this view.  For almost twenty years the responding argument has been that the community gives large tax benefits to superannuation and it would be unfair if these concessions were given to super funds not doing what society thinks is the right thing.  Additionally every SMSF that fails may also cause a slight increase in government age pension outlays so a failed SMSF can cost the government quite a lot of money throughout its existence.

Until very recently SMSF compliance with the super laws was generally woeful and the ATO hasn't had the resources to adequately address the problems.

If it wants to, the Tax Office can make the life of any SMSF trustee miserable if they flagrantly break the rules especially as the ATO now has an explicit budgetary allocation to more effectively supervise the sector.

Sensible SMSF trustees should think carefully about their disdain for the super laws because they will realize that continuing problems with the sector will lead to increased and less flexible regulation.  The sensible SMSF trustees will want to operate their super fund within the boundaries that the ATO deems suitable.

So what does the ATO find acceptable?  The ATO has produced a range of excellent guides.  But trustees should be careful as these documents are starting points and are no substitute for definite knowledge.

Another source of information which tells trustees the areas the ATO is focusing on is the questionnaire the ATO gives to trustees of new SMSFs.  On the covering note to the paper form, the ATO says that "as we are assessing your knowledge as trustee of the fund, the … questionnaire must be completed by you and not your accountant, tax agent or advisor."

The questionnaire delves quite deeply into the operations of a SMSF and the ATO provides no guarantees that the material will not cause follow-up activities if they find information which it doesn't like.

So what are some of the key areas (which incidentally are also a good list of items all SMSFs should be thinking about as part of their planning for the year)?

Traditionally SMSF trustees have been able to hide behind their ignorance when the ATO have identified problems.  Any trustee who completes this survey will not be able to argue that they are unaware of their obligations.

Once the ATO has a good data sample they have said that they will use the data to improve the documents they make available to trustees.  They have also said that they will release collated data which will no doubt make interesting reading.

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This email is general in nature only and does not constitute or convey specific or professional advice. Legislation changes may occur quickly. Formal advice should be sought before acting in any of the areas discussed. Be aware that the information in these articles may become innaccurate with time. Responsibility is disclaimed for any inaccuracies, errors or omissions. Particular investments are neither invited nor recommended and hence this publication is not "financial product advice" as defined in Section 766B of the above legislation. All expressions of opinion by contributors are published on the basis that they are not to be regarded as expressing the official opinion of any other person or entity unless expressly stated. No responsibility for the accuracy of the opinions or information contained in the contributor's articles is accepted by any other person or entity. Copyright: This publication is copyright. If you wish to reproduce this article you require a license, which can be purchased here, to do so.

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