COMPLIANCE
Compliance problem solving
It is never a pleasant experience when an SMSF falls foul of the governing legislation. Liz Westover outlines some steps that will make these situations more manageable for advisers and their clients.
LIZ WESTOVER is superannuation, SMSF and retirement savings partner at Deloitte.
30 selfmanagedsuper
There aren’t many SMSF advisers in the country who have not had a client with some form of compliance issue or breach. Fortunately, many of these are minor and can be relatively easily resolved, but occasionally they are serious and need assistance or intervention to get back on track. These issues could be anything from late lodgement of annual returns through to in-house asset issues, residency matters, illegal early release of funds or simply not getting the timing right on year-end contributions. The more serious breaches are reported to the ATO by auditors via an auditor contravention report (ACR). This type of action typically occurs in approximately 2 per cent of cases. Minor
matters may never get reported and the ones in the middle might give rise to a qualification in the annual return or are raised by the auditor in their management letter to the trustee. The main message is whatever the breach, minor or serious, don’t ignore it. It won’t get better and it won’t go away. Deal with it as soon as you can. An escalation process in assessing a problem usually works well.
What’s the problem? The first thing to do is clearly identify the problem. What is it? What led to it? Can it be easily resolved? An expense paid by the member and not reimbursed can be treated as a contribution or most auditors will allow it to be treated as a sundry creditor at year end if quickly repaid. An underpayment of minimum pension amounts is harder to resolve, but not impossible. How big the underpayment is needs to be determined. The ATO allows for an underpayment of up to 1/12th
