What the ATO will be keeping an eye on in FY19
The ATO has outlined key risk factors, behavioural triggers and paper trails that will draw its attention to your client’s SMSF this financial year.
For the tax office, the SMSF sector has been largely compliant since its birth in the 1990s. However, there are new and ongoing areas marked for surveillance each financial year, which acting assistant commissioner Tara McLachlan ran through earlier this month.
SMSF set-up
The ATO has found some taxpayers continue to see SMSFs as vehicle for early access to their superannuation funds for short-term gain, such as to pay bills or purchase a car. They are often spurred on by promoters who prey on vulnerable pockets of taxpayers.
“These individuals never had any intention of managing their own super and established an SMSF to gain illegal early access to their benefits,” said Ms McLachlan.
There are also schemes in the market which target taxpayers looking to enter the housing market by purchasing a property in their SMSF.
“[Those] schemes operate by pulling on the heartstrings of average Australians struggling to enter the housing market. Retirement savings are targeted by promoting the buying of the property through an SMSF, often with a complicated limited recourse borrowing attached, with no regard to the size of the SMSF or its ability to grow retirement savings,” said Ms McLachlan.
The ATO recently warned professionals and trustees alike of a scam concentrated in Sydney’s western suburbs, targeting those with limited knowledge of the superannuation system to facilitate illegal early access to benefits.
Red flags
There are several factors which could trigger an ATO review in your client’s SMSF registration. They include the behavioural and financial history of each taxpayer, and also the history of their service providers and tax agents.
For the individual, red flags are raised in the ATO’s system where there is bankruptcy, outstanding debts, and whether the taxpayer has links with other problem funds.
As always, the ATO is also concerned by poor lodgment and compliance history, which it heralded on several occasions last financial year during a post-reform clean up.
The ATO is similarly concerned by service providers or tax agents with outstanding debts and a poor lodgment record for its client base. SMSFs associated with these problem professionals are at higher risk of surveillance and compliance activity.
Katarina Taurian
30 August 2018
smsfadviser.com
Latest eNewsletters
Hot Issues
- Div 296 sparking death benefit discussions
- ATO warns SMSF trustees to be aware of increase in scams
- Roles and Responsibilities in a Business Partnership
- Beware of tax implications for failing to meet minimum pension requirements: consultant
- Leasing property owned by an SMSF
- A super contributions deadline you won’t want to miss
- How topping up your super each year could leave you $80,000 better off in retirement
- Evolution of Boeing - 1916 - 2025
- ATO issues guidance on SMSF trustee appointment and compliance
- ASIC to increase audit surveillance in 2025–26
- Investment and economic outlook, May 2025
- Legal case has succession planning lessons for SMSF members, advisers: legal expert
- Your 30 June superannuation checklist
- Start-ups to suffer under Div 296
- New SMSF trustees propel uptake of financial advice
- Comparison of various Animal Weight
- $95bn loss predicted to Australian economy if Div 296 passes: analysis
- Why more Australian SMSF owners are looking to global equities
- Investment and economic outlook, April 2025
- Trustees reminded of minimum pension drawdown
- How boosting your super can help you reduce your tax bill
- Are your adult children ready for the wealth transfer?
- Financial abuse move now a certainty
- Freshwater Resources by Country 2025
- Investment and economic outlook, March 2025
- Advisers should be aware of signs of elder abuse in SMSF structures
- SMSFs hold record levels of cash and property
- Trustees warned on early access