ATO cracking down on late lodging SMSFs

From 1 October 2019, if an SMSF is more than two weeks overdue on any annual return lodgement due date and hasn't requested a lodgement deferral, we will change their status on Super Fund Lookup (SFLU) to 'Regulation details removed'

The ATO stated “We're taking this approach because non-lodgement combined with disengagement indicates that retirement savings may be at risk. This status will remain until any overdue lodgements have been brought up to date.”

The impact of having a status of “Regulation details removed” means the Australian Prudential Regulation Authority (APRA) funds won't roll over any member benefits to the SMSF and employers won't make any Superannuation Guarantee (SG) contribution payments for members of the SMSF.

When do funds get affected?

On the first business day of each month, there is now a two-step process for updating SFLU.

  1. Where an SMSF trustee hasn't lodged their SMSF annual return on time and they're more than two weeks overdue, we will change their SMSF regulation status to 'Regulation details removed’ on SFLU.
  2. Where all overdue lodgements are received for an SMSF during the previous month, we will update SFLU to reinstate the SMSF's 'complying' status.

Hence you need to wait until the first business day after you have lodged the fund before the fund becomes “complying status”.

How will this change affect SMSFs?

Having a status of ‘Regulation details removed’ means APRA funds won't roll over any member benefits to the SMSF and employers may not elect to make any super guarantee (SG) contribution payments for members of the SMSF. All SG contributions will need to be paid to an alternative complying fund such as a default APRA regulated fund.

What can SMSF trustees/members do?

Providing all the information your tax agent requires will help ensure your fund is completed by the due date. This should be every trustee’s priority.  Once accounts are completed trustees should signed and returned the accounts and annual return as soon as possible to ensure they are processed by the due date.

If it is not possible to file by the due date your tax agent can seek a deferral to lodge SMSF annual returns before the due date. This will ensure that their SMSF status remains ‘complying’.

Requests for deferral should be submitted well before month’s end to ensure it's actioned before SFLU is updated. Please note if you do not meet the agreed date of referral a 'Regulation details removed’ status will then be displayed until brought up to date.

While the fund's status is 'Regulation details removed', members should alert their employer to make any SG payments into the employer's default super fund or another complying fund of the member's choice.

Once the SFLU status of the SMSF has been updated to 'complying', members can rollover any superannuation benefits to the fund and employers and re-commence SG contributions.

 

If this article has raised any questions or you would like to discuss your clients’ needs further, contact Alex Swansson today on 1800 333 143.