Don’t Be Late – Have You Lodged Your SMSF Tax Return?

Most people understand they need to lodge their personal tax return but there are a surprising number of self managed super fund (SMSF) trustees who don’t seem to understand the importance of getting their SMSF tax return in on time. And don’t get confused by the term ‘trustee’. If you have an SMSF – you’re the trustee. It’s your responsibility to ensure your fund meets ATO requirements. If it doesn’t, the ramifications can be significant.

Immediate ramifications

Once a tax return is late, the ATO can issue failure to lodge penalties – one penalty unit for each 28 day period.

More significantly, your super fund status can be impacted. Once your annual return is more than two weeks overdue, the compliance status is changed to ‘Regulation Details Removed’ on Super Fund Lookup.

The implications of having your fund’s compliance status removed include:

• You may be unable to request rollovers from APRA funds into the SMSF.
• You may not be able to open new bank accounts and acquire new managed fund investments.
• Your employer may not be able to make contributions into your SMSF. Since your employer has an obligation to make super guarantee contributions, they may have to place those contributions into a default fund. This creates unnecessary work for you because you will need to consolidate these contributions into your SMSF at a later date.

Less well-known ramifications

The due date for the following financial year could be brought forward by the ATO (to the October or February deadline). The earlier date becomes more difficult to meet and potentially leads to the situation where your fund is perpetually in a late lodgement situation.

Administrative penalties

The ATO has the power to levy administrative penalties on the trustees. If your fund has an individual trustee structure, each individual trustee would be penalised. If the SMSF is structured using a corporate trustee then the penalties are levied only once.

These levies cannot be paid from the SMSF.

Other ATO powers

One of the most significant powers available to the ATO in relation to SMSFs is the ability to issue a notice of non-compliance. This is a significant penalty to impose because it means the assessable income generated by the fund is taxed at the highest marginal tax rate for every year that the SMSF is non-complying.

Additionally, in the year it becomes non-complying, an amount equal to the market value of the fund’s total assets less any non-concessional contributions is included in assessable income where it is taxed at the highest marginal tax rate.

Other powers that the ATO can use include:

• Education direction
• Enforceable undertaking
• Rectification direction
• Disqualification of a trustee
• Civil and criminal penalties
• Allowing the SMSF to wind up
• Freezing an SMSF’s assets

Help is available

If all of the above sounds a little concerning, get the right help. E&P Financial Group’s specialist SMSF accounting team has already lodged FY2023 tax returns for 90% of its clients – well ahead of the industry average.

E&P Financial Group has a team of highly credentialled accounting specialists who solely focus on self-managed super funds. Having a dedicated SMSF accountant means you have someone who understands your obligations as trustee and will work with you to help ensure you meet them. This means:

• helping you keep up-to-date with compliance rules and rule changes that might impact your fund
• proactively notifying you of upcoming EOFY requirements
• prompting you when they become aware of items that might put you at risk of suffering penalties or regulatory consequences – including fund non-compliance.

If your self managed super fund would benefit from a specialist SMSF accounting service, speak to one of our team using our ‘find an accountant’ function.