ATO Regulator update Kellie Grant, Director, ATO - SMSF Adviser
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ATO Regulator update Kellie Grant, Director, ATO #smsftechnicalstrategyday @SMSFAdviser @SMSF_Adviser
Overview
The growth of SMSFs:
• Over 1.1 million SMSF members in almost
600,000 SMSFs
• Asset value is around $822 billion
• Over a quarter of the $3.1 trillion in
Australian superannuation pool
Session outline
• Our role as regulator
• Key compliance risks for the 2022 financial
year
• Upcoming changes and new measures
#smsftechnicalstrategyday @SMSFAdviser
Our role as the regulator
Key elements of our role:
• Ensuring trustees enter and stay in
the system for the right reasons
• Supporting self-regulation
• Implementing legislative changes
• Being transparent
• Working with our co-regulators
• Ensuring strong collaboration
#smsftechnicalstrategyday @SMSFAdviser
Our regulatory stance
Support:
• Covid-19 continues to impact some SMSFs
• Supporting trustees and the super
industry is critical
COVID-19 relief ─ we have recently extended:
• SMSF residency relief
• rental relief
• loan repayment relief
• in-house asset relief
#smsftechnicalstrategyday @SMSFAdviser
Our regulatory stance
Risk areas of concern:
• Approved SMSF auditor risk areas
• Illegal early release of super
• SMSF investment scams and ID fraud
• Non-lodgment of SMSF annual returns
• Regulatory contraventions and
inappropriate tax planning
#smsftechnicalstrategyday @SMSFAdviser
Approved SMSF auditor risk areas
Majority of auditors demonstrate a high level
of competency and professionalism:
• Independence ─ since 1 July 2021
auditors must comply with new
requirements
• Adequacy ─ 16 auditors referred to
ASIC in 2021 financial year including 6
relating to our top 100 auditor program
• SAN misuse ─ 1,327 instances of SAN
misuse reported for the 2019 audits
#smsftechnicalstrategyday @SMSFAdviser
Illegal early release
Secure front door program ─ we closely
monitor all SMSF registrants:
• 25,940 new SMSF registrations ─ 18%
increase in new SMSFs registered in
2021 financial year
• Protected almost $170m from leaving
the super system illegally
• So far there has been a 33% increase in
registrations in the 2022 financial year
• Increase in high risk cases ─ 27% SMSFs
selected for review
• This year we’ve protected over $35m
from leaving the system
#smsftechnicalstrategyday @SMSFAdviser
ID fraud and investment scams
Detection of identity fraud:
• Increased number of identity fraud
cases linked to SMSFs
• ATO alerts help protect against ID
fraud and investment scams
• If trustees are not aware of the
activity, act fast and contact us
• Be cautious when providing identity
and super details
• Remind clients to check they’re dealing
with a licenced financial adviser
#smsftechnicalstrategyday @SMSFAdviser
Non-lodgment of SMSF annual returns
The fundamental compliance obligation is to Never lodgers
lodge SAR:
over time
• Number 1 red flag is an SMSF trustee failing
25.00%
to lodge their SAR
• 2019 SAR ─ lodgment rate is currently
20.00%
around 91%
• 2020 SAR ─ lodgment rate is currently 15.00%
around 85%
• When an SMSF has operated and stops 10.00%
lodging they become a ‘lapsed’ lodger
• Some SMSFs ‘never’ lodge after being 5.00%
registered
• 2020 year ─ 25% of 22,000 new registrants 0.00%
failed to meet first lodgment deadline.
#smsftechnicalstrategyday @SMSFAdviser
Non-lodgment of SMSF annual returns
Three strikes and you’re out ─ for trustees
that refuse to engage:
● Blue nudge letter – directs
trustees to lodge
● Amber warning letter – advises
there are consequences
● Red final letter – warning we
will take the next action
#smsftechnicalstrategyday @SMSFAdviserRegulatory contraventions and
inappropriate tax planning arrangements
Excellent regulatory compliance:
• No reportable contraventions for 97% of
the lodging SMSF population
• ACRs received for 13,800 SMSFs, listing
40,000 contraventions
• Unrectified contraventions decreased
from 65% to 59%
Commonly reported contraventions:
• Loans to members
• In-house assets
• Separation of assets
#smsftechnicalstrategyday @SMSFAdviserRegulatory contraventions and
inappropriate tax planning arrangements
Main drivers of regulatory contraventions:
• Financial stress
• Poor record keeping
• Desire to rapidly and excessively grow
wealth
How we respond to breaches depends on:
• Nature of the breach
• Compliance history
• Whether there has been previous
breaches
#smsftechnicalstrategyday @SMSFAdviserSMSF early engagement and voluntary
disclosure service
Voluntary disclosures received
We work with trustees to rectify
contraventions: FY Period Received
30 May to 30 June
2016 16
• Trustees should contact us before we 2016
commence an audit 1 July 2016 to 30 June
2017 265
2017
• Single-entry point to engage with us in 2018
1 July 2017 to 30 June
246
relation to unrectified contraventions 2018
1 July 2018 to 30 June
2019 353
2019
• Go to ato.gov.au and search ‘SMSF early
engagement and voluntary disclosure 1 July 2019 to 30 June
2020 468
service’ 2020
1 July 2020 to 30 June
2021 807
2021
2022 Up to 31 August 2021 220
#smsftechnicalstrategyday @SMSFAdviserSupport and guidance ─ new policy
Law Companion Ruling 2021/2:
• All SMSF transactions should be on an
arms-length basis
• Consider if a service provided by a member
is in capacity as trustee or as professional
• Discounted fees need to be consistent with
commercial practices
• Practical Compliance Guide 2020/5 applies
up to 2022 financial year
#smsftechnicalstrategyday @SMSFAdviserNew measures and important changes
eSAT transition to Online services for
business:
• Online services for business is now
being used by auditors to lodge ACAs
and ACRs
• Co-design sessions held with auditors to
make further enhancements to Online
services for business, including
o ability to save auditor details
o download and save lodged ACRs
o increase limit of draft ACR forms
from 50 to 150
• eSAT to be decommissioned in March
2022
#smsftechnicalstrategyday @SMSFAdviserNew measures and important changes
Member increase:
• Increasing to 6 members now available on
ABR
• 96 SMSFs have registered with > 4
members
TBC indexation:
• On 1 July 2021 transfer balance cap
indexed to $1.7m
• Everyone now has a personal transfer
balance cap between $1.6 – $1.7m
#smsftechnicalstrategyday @SMSFAdviserNew measures and important changes
Changes to the SMSF rollover process:
• Since 1 October 2021 SMSFs need to use
SuperStream to rollover super
• Ensure your SMSF has an ESA that
provides rollover services
• An ATO alert is sent to individuals when
their APRA fund makes a rollover
request into an SMSF
SMSFs must have a unique bank account:
• it must be in the fund’s name
• if it’s not unique, the SMSF won’t be able
to receive a rollover
#smsftechnicalstrategyday @SMSFAdviserNew measures and important changes
Director ID:
• Will help prevent use of false director
identities
• Directors of a corporate trustee of an
SMSF will need to apply for a Director
ID on the new ABRS website
Actuarial certificate:
• Requirement removed for trustees to
obtain an actuarial certificate when:
o calculating current pension
income; and
o all members in retirement phase
for current income year
#smsftechnicalstrategyday @SMSFAdviserNew measures and important changes
Proposed measures not yet enacted,
announced in 2022 Budget, that impact
SMSFs, include:
• reducing minimum age for downsizer
contribution from 60 to 65
• increasing voluntary contributions under
First Home Super Saver Scheme
• repealing work test for individuals aged 67
to 74 under some circumstances
• allowing two year period to convert legacy
retirement product
• relaxing residency requirements
#smsftechnicalstrategyday @SMSFAdviserConclusion
Key messages:
• Our primary objective is to guide
and support trustees to willingly
meet their obligations
• We will continue to work to
ensure the SMSF sector remains
strong and resilient against
current challenges
#smsftechnicalstrategyday @SMSFAdviserYou can also read
