ATO flags most common SMSF return mistakes
The Australian Taxation Office has revealed the top five most frequent errors made in the submission of SMSF annual returns as well as how advisers can avoid them when lodging this year.
A bank account that isn’t unique to the SMSF
The ATO said there must be a bank account in the fund’s name to manage the SMSF operations and to accept contributions, rollovers of super and income from investments.
Further, it said the account must be separate from the trustees’ individual bank accounts and any related employers’ or advisers’ bank accounts.
“This will protect your fund’s assets and ensure super payments can be made to your SMSF,” the ATO said.
Providing an incorrect electronic service address (ESA)
The ATO said an ESA allows an SMSF to receive electronic remittance advice and contributions if it has members receiving super from non-related employers. Therefore, it’s not an email address or the contact details of the SMSF messaging provider.
“An ESA consists of alphanumeric characters with a combination of upper and lower-case characters and is case sensitive,” the Tax Office said.
Not valuing an SMSF’s assets at market value
The Tax Office noted that SMSF assets need to be calculated at market value as at 30 June to prepare the fund’s accounts, statements and SAR.
“If you follow our valuation guidelines, we’ll generally accept the valuation you provide,” the ATO said.
“Accurate asset valuation is important to ensure your SMSF retains its complying fund status. Penalties may apply for inaccurate valuations as these can have an impact on your members’ balances.”
Trying to lodge with zero assets
The ATO said an SMSF is not legally established until the fund has assets set aside for the benefit of members. As a result, the regulator said it won’t accept a SAR from an SMSF that has no assets unless the fund is being wound up.
“If this is your SMSF’s first year and you have no assets set aside for the benefit of members, you can ask us to either cancel your fund’s registration or flag the SMSF’s record as return not necessary (RNN),” it said.
Lodging an SAR without auditor details
An approved auditor examines an SMSF’s financial statements and assesses the fund’s compliance with super law, meaning an audit must be completed before your SAR can be lodged, according to the ATO.
“A SAR lodged without auditor’s details will be suspended and not recognised as a lodgment. This will impact the complying status of the fund until the SAR is lodged with the required information,” the ATO said.
“Appoint an auditor at least 45 days before your SAR is due to ensure the audit is completed in time to meet the lodgment date.”
26 February 2020