The ATO has confirmed it will apply a common sense approach to situations where SMSF trustees are unable satisfy the obligation they have to provide the fund’s auditor with the original trustee declaration under section 104A of the Superannuation Industry (Supervision) (SIS) Act.
“We understand trustees may not be able to satisfy their auditor that they have met the requirements of this provision with respect to both the signing and retention of the declaration. In which case the ACR (auditor contravention report) instructions state that the auditor only needs to report the contravention once, that is, in the year they identify the breach,” ATO director Kellie Grant noted.
“However, if trustees sign a new trustee declaration, this will rectify the breach and meet the record-keeping requirements going forward. The auditor can then report the contravention as one that is rectified and we are unlikely to take any action against that breach,” she explained.
Auditors Institute director and Evolv Super chief executive Ron Phipps-Ellis welcomed the ATO’s current position on the matter after the regulator’s approach had significantly changed as stated in its recent guidelines. Here an obligation was imposed on SMSF auditors to sight the signed original declaration and keep it on the audit file, alongside written representations regarding the retention of trustee declaration.
Previously SMSF auditors have dealt with SIS Act section 104A compliance by reviewing the signed trustee declarations from the year under audit and confirming with trustees they have retained their declaration within the representation letter. Where this has not taken place and original declarations are unavailable, a current section 104A declaration was sought from trustees.
Phipps-Ellis did however call on the ATO to issue some new guidance confirming this new compliance approach and suggested the regulator should consider a more practical and effective compliance mechanism, such as including an annual trustee declaration as part of the SMSF annual return.