Compliance Hotspots for SMSF 2018-19 from Shirley Schaefer, Partner BDO published in SMSF Adviser Magazine Nov/Dec 2018

What the ATO has on their Radar this year

Late or Non-Lodgement of Tax returns. “The ATO has clearly done some work around this and SMSF trustees are realising that they need to get everything into line … Interestingly, for some … it goes back a significant number of years; the ATO seems to be happy so long as the trustees actually engage an accountant or an administrator to take them under their wing and get it done. That’s their main focus, to make sure people get it started if nothing else.”

“We may see them (ATO) focusing on related party limited recourse borrowing arrangements. Now that most of 2016-17 tax returns have been lodged, they’ll be able to identify those funds that have got a related party borrowing arrangement in place, and of course if they’re not at arm’s length terms, then the income from that arrangement could potentially be taxed as non-arm’s length income. Taxed at the highest rate.”

The other thing, which is always on their radar, is early access to super and loans to members. They’ve always got their eye out for those types of things.”

Compliance Hot Spots

Issues with returns for the 2016-17 financial year – “The biggest area of concern, although it wasn’t so much a problem, was just having to deal with the resetting of pension balances down to the $1.6million and then correctly calculating the reset of any asset cost bases and the capital gains tax for the relief.”

2017-18 financial returns, traps that will arise with those – “Nothing that’s really come in so far, but I do expect to see some problems or some issues and errors with contributions made to super in the 2017-18 financial year, with changes in the limits. Concessional contributions caps went down to $25,000 and non-concessional limits were reduced to $100,000. Also, the additional thresholds around non-concessional contributions, the fact that you can’t really make non-concessional contributions if you’ve got more that $1.6 million in super, and just the further complication of those rules. Despite everyone’s best intentions, I think trustees will make mistakes.”

Transfer Balance Cap Reporting – “I still think there’s a lot of accountants out there who don’t know that they were supposed to report by 30 June 2018, the 30 June 2017 pension balances, and they still don’t realise that they need to do regular reporting to the Tax Office of different events … a lot of the smaller accounting firms are not across a lot of that stuff yet”

To read more on this go to www.smsfadviser.com