ATO, Documentation

Tougher SAR stance applied

SMSF annual return enforcement

SMSF trustees who are failing to meet their legal obligation of lodging their fund’s annual return are to face new ATO enforcement procedures.

The ATO has implemented new enforcement procedures to reduce the number of SMSF trustees who are failing to meet their statutory obligation of lodging their fund’s annual return.

The regulator is calling the campaign “three strikes and you’re out”, which involves three different pieces of correspondence with increasing seriousness.

“We start with a blue branded nudge letter that encourages the trustee to take immediate action and lodge [the fund’s return]. It also outlines a pathway if those trustees need our help and support,” ATO self-managed super fund segment director Steve Keating told delegates at SMSF Trustee Empowerment Day 2021, hosted by smstrusteenews, last week.

“If we don’t receive a response to this letter, we issue an amber letter that advises the trustee of the potential consequences of not lodging their return. And these enforcement actions include imposing failure-to-lodge penalties for all overdue years, raising the full assessments for each year of non-lodgement with penalties of up to 75 per cent, issuing a notice of non-compliance and/or disqualifying the trustees.

“If we still do not receive a response, we issue our final warning. It’s a red letter confirming the next time the trustees hear from us we will have taken the enforcement action that we specified in the previous letter.”

Keating assured trustees the ATO will be reasonable in its approach to this new enforcement measure.

“For instance, if after we have issued a notice of non-compliance and trustees contact us and promptly lodge all overdue SMSF returns, and commit to us that they will lodge all future SMSF returns on time, we will consider revoking that notice,” he said.

“It is important that we distinguish our treatment of SMSF trustees that do the right thing compared to those that don’t.”

He took the opportunity to issue a warning message to SMSF trustees considered late or never lodgers.

“We are very serious about driving on-time lodgement so bring your lodgements up to date,” he said.

During the same presentation, the ongoing issue of non-compliance with annual return lodgement obligations was detailed.


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