The ATO is conducting an intelligence-gathering exercise to estimate the level of illegal early access coming from SMSFs to identify trustees likely to breach the rules after noting ongoing compliance issues.
ATO SMSF risk and safety assistant commissioner Justin Micale revealed the new program was currently compiling data that would give a clearer picture of the size of the problem and compliance action to address further illegal early access.
“In what is a major development in this area, we have a new program in place which will allow us to estimate the amount of money that’s leaving the system before it should,” Micale said.
“This program, known as our Illegal Early Access Estimate, will allow us to determine the size, scale and trajectory of that risk, as well as gather intelligence to assist us with dealing with it.
“This is our first attempt at measuring the amount of money inappropriately withdrawn by trustees who manage their own SMSF and being the first time we’ve done an estimate of this type, I’m sure it’s really going to bring this issue into the spotlight for the sector.”
He explsined the program, the results of which would be publicly released early next year, was based on work the regulator does in estimating gaps in income tax payments and would involve an examination of funds that had not lodged annual returns and auditor contravention reports (ACR).
“We will do random inquiries, which is done in many of the tax gap estimates that have been undertaken, and we do have a statistically valid sample of people that aren’t lodging to determine to what extent are they involved in illegal early release,” he said.
“We will also do a deep analysis of the auditor contravention reports, so for a particular year that involves us looking at over 6000 ACRs in detail to work out to what extent illegal early access has occurred or whether clients are entering into prohibited loans.
“We are doing this because our greatest area of concern continues to be illegal early access.
“It’s clearly in all of our best interests to get on top of this as the consequences are significant and have the potential to really go to the heart of integrity and the reputation of the sector.”''