There exists a notable array of reporting obligations related to SMSFs, with the primary one due in just a few days for certain self-managed funds.
An annual return is required to be submitted to the ATO once the audit of the SMSF has been completed. This goes beyond an income tax return; it will likely be used to report substantial regulatory data, member contributions, and pay the SMSF supervisory levy.
For trustees who file their own returns, the deadline is 28 February. For those who utilize a tax agent for filing (which is more common), there is additional time available, typically with a final deadline of 15 May.
the submission of the annual return marks the conclusion of an extensive process involving compliance and regulatory reporting. While late self-filers may find themselves too late to complete all necessary tasks, tax agent filers still have time to get everything done before the final May deadline. tax agents generally require all similar information as those who filed by 28 February and an auditor must be appointed at least forty-five days prior to lodging date (or by end of March).
This is what needs to occur:
Annual Accounts
No sooner than after each financial year ends must Trustees adhere to various business reporting requirements. These include preparing:
- A statement of financial position detailing assets and liabilities as at the end of that previous financial year; which falls on June 30 of last year,
- An operating statement reflecting income earned or losses incurred by the fund during that financial year (or part thereof if it was not operational for a full year),
- Member statements along with other reports that need preparation
An SMSF must maintain accounting records. These records should be organized with supporting documentation so thay can undergo proper auditing. Accounting records need to be kept for five years following each financial year’s conclusion they pertain to.
Audit requirements
A subsequent step after completing annual accounts involves arranging for an independent and qualified SMSF auditor registered with ASIC (Australian Securities & Investment Commission) to audit both financial statements and accounting records associated with the fund. They are required indeed possess a valid SMSF auditor number (SAN).
The role of an SMSF auditor includes reviewing both financial statements and supporting documents related to funds while providing their opinion on whether these statements accurately reflect a true view regarding fund status.
If any breaches are identified by auditors within fund operations,they are mandated to report these findings directly back to ATO.
Additonally, auditors must evaluate overall compliance concerning Superannuation industry (Superannuation) Act 1993 alongside relevant regulations.
Certain common issues we have observed necessitate auditors either reporting breaches or advising clients through qualifying audits while documenting concerns in management letters addressed towards trustees:
- Insufficient documentation maintained substantiating activities/transactions within large funds – you cannot simply present an excel spreadsheet listing items you wish them informed about without authentic bank statements or invoices etc.
- failure retaining foundational documents establishing large funds – signed trust deeds along with ATO trustee declarations/minutes represent just some essential paperwork needing preservation/maintenance from trustees.
- Ensuring documented current investment strategies exist
- Fund assets should remain titled under name belonging solely towards large fund ensuring clear separation between personal resources held by trustees versus those belonging specifically towards said larger entity
Auditors ought provide audit reports ahead deadlines set forth regarding lodgment pertaining annual returns – remember this stands at February twenty-eight self-filers whereas fifteen May applies tax agent clients respectively! Returns cannot proceed until audits finalize completion!
If lodgment requirements fail being met penalties arise including monetary fines ($330 FTL – failure lodge penalty currently imposed every period exceeding twenty-eight days overdue up maximum five penalty units totaling $1,650). Note FTL penalties remain non-deductible expenses applicable against respective SMFS!
Additonally ATO possesses range stricter sanctions possibly enforced such requiring trustee training sessions rectification directives disqualifying individuals winding-up entire funds civil/criminal repercussions rendering said entities ‘non-complying’!
A non-compliance notice indicates severe violations against established guidelines governing SMFS resulting loss concessional taxation rates previously enjoyed dropping rather forty-five percent applied profits generated alongside asset values held therein! Franking credits become unclaimable exempt pension profit deductions unavailable likewise no carry-forward options exist concerning capital losses/taxes owed until resolution achieved whereby standing restored compliant status confirmed via taxation office notification received accordingly!
Thus advisors benefit encouraging tardy trustees ensure deadlines aren’t overlooked!
this article serves informational purposes only does not constitute legal/tax advice whatsoever.
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