Self managed super in tax office sights

Self managed super in tax office sights

Posted on Jul 1, 2011 in Blog by jata 0 Comments

The Australian Taxation Office is keen to ensure trustees of self-managed superannuation funds are doing the right thing.

The sector comprises the largest segment of the nation’s super industry, with an extra 30,000 SMSFs expected to be established this year.

The ATO will today release its compliance program for 2011-12, and the strict requirements in relation to SMSFs are one of its key areas of focus.

This financial year the tax office is looking at newly registered funds to ensure they have not been established to “provide illegal early release of superannuation funds to their members”.

The tax office will also monitor SMSFs to check that annual reports are being filed — it is a breach of various tax and super laws if a trustee of a SMSF fails to lodge an annual report.

Also being targeted are loans to members, for example investing in a family business that might breach the “5 per cent rule”. An SMSF can invest no more than 5 per cent of its assets in a related-party transaction.

Mr. Neil Olesen, deputy commissioner, superannuation, said that the tax office had enjoyed some wins in the courts in relation to “trustees who use their SMSFs as their personal bank accounts”.

Mr. Olesen said fines of $12,000 to $15,000 had been imposed on people who had rolled over super and then withdrawn it and used it as living expenses. “That continues to be a focal point for us,” Mr Olesen said.

At the end of March this year, the tax office had identified more than 445,000 SMSFs in operation.

Small and larger super funds will also be subject to scrutiny; the tax office plans to audit 110 of them.

Although these funds are regulated by the Australian Prudential Regulatory Authority, the tax office is keen to check on “lost” super, how they treat the superannuation of departing temporary residents.

“We will also check they have met their obligations to pay unclaimed money to us, and to release excess contributions” where a release authority has been provided, the tax office says in the compliance program.

The tax office will audit 25 of the 75 large funds to ensure they are meeting their obligations.

Last year, the tax office received more than 16,300 complaints from people concerned that their employers were not making super payments on their behalf. The tax office will continue to investigate illegal early-release super schemes, and will refer offenders for prosecution.