In a speech last week Michael D’Ascenzo, Commissioner of Taxation explained the ATO’s approach to SMSF compliance under the new super rules:
"We plan to increase our active compliance resources to 590
employees and increase our compliance checks of self managed
superannuation funds and approved auditors. For new self managed
superannuation funds we will be introducing a compliance verification
program along the lines of the GST advisory visits to establish
positive compliance behaviour early in the life cycle of the fund….
As the new arrangements are bedded down, we will identify and
correct non-compliant behaviour by adopting an appropriate balance
between help and education services and active compliance activities.
For example, where a fund does not meet the legal definition of a
self managed superannuation fund we will give trustees an opportunity
to restructure the fund without losing their complying status. However
where there are serious or repeated contraventions we will take firmer
Experience in other areas such as GST demonstrate that contacting
the taxpayer at an early stage is effective in reducing non-compliance
and gets funds on the right track from the beginning. The early
intervention strategy allows us to identify educational needs and
prepare specific educational products and compliance reviews for new
We have received over 10,000 Auditor Contravention Reports as
at 31 December 2006 from 9,906 auditors since reporting commenced on 1
July 2004. The number of contraventions reported were more than 16,000.
Of these about half were reported as unrectified (50.6% of total
contraventions). Key contraventions are:
- loans made to a member or a relative (18%),
- assets not in the name of the fund (16%),
- breach of in-house asset rules (14%);
- documents requested by auditor were not provided (11%),
- borrowings by the SMSF for purpose not allowed by the legislation (9%), and
- breach of sole purpose test (8%)."
It’s clear that the ATO sees superannuation surveillance as an important function.