Recently, the ATO published a speech delivered by the ATO Deputy Commissioner Superannuation, James O’Halloran, in an address to the CPA SMSF conference. The Deputy Commissioner discussed the Superannuation reforms and noted particular interest from the general public in relation to the proposed $500,000 lifetime cap for non-concessional contributions and the Productivity Commission inquiry into the efficiency and competitiveness of the superannuation system. Mr O’Halloran has also announced the following major areas/issues, which will be on the ATO’s radar for 2016-17 year:
Dividend Stripping arrangements – the ATO expects from auditors to report tax-related issues arising from these arrangements: “While we acknowledge that SMSF auditors are not obligated to report income-tax related issues, these arrangements can raise potential regulatory issues (e.g. in-house assets, valuations and the sole-purpose test) and auditors do need to take them into consideration.”
The ATO has given examples of their serious enforcement to show that it takes strong action against serious non-compliance, albeit in a very small number of instances.
Auditor Independence – the ATO is now focusing on the case where the auditor of a fund also acts as the tax agent for the same fund. “An early indication is that almost 1,000 auditors (or 500 reciprocal arrangements) could be involved in this type of arrangement.”
Non-lodgement of SMSF annual returns. The ATO’s has given an example about a failure to lodge annual returns for a number of years that has led an SMSF to become non-complying
The ATO’s recently launched Super scheme smart initiative is aimed at educating advisers and individuals about the potential pitfalls of retirement planning schemes.
ATO’s continuous focus on low-cost auditors.
The Deputy Commissioner has also presented some statistics for prior years:
Australia now has nearly 600,000 SMSFs and slightly more than 1 million SMSF members based on 2015-16 year. 2,500 new registration applications are received by the ATO each month.
In 2014-15 22,000 breaches were reported in 8,200 funds.
In 2015 the ATO referred 7 SMSF auditors to ASIC.
There was a 38% reduction in the number of funds with enforceable undertakings in 2015-16 year. Conversely, the number of rectification directions issued by the ATO has increased by 70%.