The Australian Taxation Office (ATO) is warning self-managed superannuation trustees and their advisers that lodging annual returns late will result in a change to an SMSF’s fund status, risking their retirement savings.
The harsh consequence is in response to nearly 100,000 SMSFs out of a total 600,000 not lodging their returns with the ATO last year.
If an SMSF is more than two weeks overdue on its annual return, the ATO will change the status on Super Fund Lookup to ‘regulation details removed’.
This means employers are unable to make any super guarantee contribution payments for members of the SMSF.
In addition, the Australian Prudential Regulation Authority will not roll over any member benefits to the SMSF.
The ATO says: “Non-lodgement, combined with disengagement, indicates to us that members’ retirement savings may be at risk.”
The due date for 2018/19 SMSF annual returns is 15 May 2020. Trustees are reminded that an auditor must be appointed 45 days before the due date, making this deadline 31 March 2020.
“If you don’t appoint an auditor by this date, you could face severe financial penalties of up to $10,500.”
In addition, the tax office is reminding trustees to wait to sign their annual return until the auditor’s report has been received.
The consequence of signing the return before the report is penalties up to $12,600 for making a false and misleading statement.
The ATO says: “The auditor’s report will advise whether your fund breached any super laws, and you should rectify any contraventions as soon as possible.”
The tax office has counted over 24,000 ‘never lodgers’ after a campaign. These are estimated to be worth at least $1 billion as calculated from the exit of their APRA super fund.
Dana Fleming ATO assistant commissioner of the SMSF segment says: “The never lodging population is of great concern to us as it is highly correlated with illegal early release.”
There are 56,000 lapsed lodgers with $19.5 billion of retirement savings that are at risk.
Fleming says some reasons for this are that the trustee has received a contravention and does not know what to do with it or a member has died, and the other member is not aware of the fund.
“I am really concerned that we have no visibility over whether those retirement savings are there or not.”
SMSF trustees can request an extension for both their annual return and the appointment of an auditor by contacting the ATO.
The lodgement date for the annual return does not apply to those SMSFs with a business or postal address in an identified bushfire-impacted postcode.
The ATO says the date does not apply to those SMSFs that were non-taxable or received a refund by the latest year lodged and are non-taxable or will receive a refund in the current year.