ATO turns up heat on SMSFs

TheAustralianTaxation Office(ATO) has issued a blunt message to self-managed superannuation funds (SMSFs) warning the honeymoon period in its regulation of the sector is over and that it is preparing to take a more hardline approach.

The ATO signalled its tougher stance in a statement to tax practitioners late last month where it said, “the tax office has shifted from an education focus and is now concentrating on compliance”.

The statement said the ATO was specifically targeting those seeking early access to preserved superannuation benefits through SMSFs, an area where it was working “to identify and pursue promoters”.

The ATO also said in-house assets levels in SMSFs were a major concern and that it was “considering enforcement action against a number of trustees”.

To back up the tougher stance, the tax office has doubled the size of the team policing the SMSF sector to over 100 people.

Other areas the beefed up team will actively pursue include the non-lodgement of superannuation returns by SMSFs, and the lodgement of unusually large deductions by SMSFs.

The ATO’s new stance comes some three years after it took over the regulation of SMSFs from theAustralian Prudential Regulation Authority(APRA) with a pledge to initially take a consultative and educational approach with the sector.

The managing director of superannuation trustee group Australian Superannuation Nominees, Ben Smythe, says the ATO’s statement is a clear indication the honeymoon is over and the tax office is gearing up to take a much more aggressive approach in the regulation of SMSFs.

ATO assistant commissioner Graeme Wilkinson says the tax office will continue to take a consultative approach with those who have inadvertently breached the SMSF rules.

However, it is understood the tax office will take a much tougher line when judging whether super funds have inadvertently or deliberately breached the rules, particularly with long-standing funds that have a history of non-compliance.

Sources at the ATO say it will also be more prepared to use the enforcement powers available to it to crack down on those it views are flagrantly breaking the rules.

It is understood the ATO is also considering a proposal to introduce “pre-registration checks” for SMSFs, requiring all funds and their trustees to go through a formal background check before being allowed to operate.