Key Points:
– Deadline is 28 February, but those using a tax agent have until 15 May.
– Up to a $1,375 penalty for ‘failure to lodge’, non-deductible.
With the deadline of 28 February now less than a week away, Director of Tax Communications at H&R Block Mark Chapman noted the importance for trustees to ensure their annual return is lodged by the due date.
“The annual return is more than just a tax return; it is also used to report super regulatory information, member contributions and pay the SMSF supervisory levy,” Mr Chapman told Savings.com.au.
“Failing to meet the lodgement requirements can result in penalties, including monetary fines.”
Mr Chapman detailed the current ‘failure to lodge’ (FTL) penalty is $275 for each period of 28 days that the annual return is overdue, up to a maximum of five penalty units or $1,375.
“The FTL penalty is also a non-deductible expense for the SMSF,” he said.
For trustees lodging their own return, the deadline set by the ATO is 28 February 2023.
Those that elect to use a tax agent to lodge their SMSF annual return have a deadline set by the ATO of 15 May 2023.
Common issues found at audits
Some of the common issues requiring auditors to report a breach or caution the client by qualifying the audit, and record the issue in a management letter to the trustee are:
1. Sufficient documentation
“Not keeping sufficient documentation to substantiate activities and transactions of a super fund [is a big issue],” Mr Chapman said.
“You can’t just provide an excel spreadsheet of items to the auditor that you wish to claim. You need to have original bank statements, invoices for expenses and so on.”
2. Failing to hold onto documents
“Signed trust deed, ATO trustee Declarations and establishment minutes are just a few of the important documents that need to be kept and maintained by the trustee,” he said.
3. Having an investment strategy
“Ensure they (SMSF trustees) have documented a current investment strategy,” he said.
An investment strategy is an important document that needs to be completed annually or when major events happen. It is more than just an outline of portfolio allocations and percentages, but more a justification of why you have invested in certain things and how they will benefit members.
With a housing downturn and volatile sharemarkets, chances are your investment strategy might have changed compared to a year ago.
4. Fund naming conventions
“The assets of the fund must be held in the name of the super fund to ensure separation of assets between the trustees’ personal assets and the super fund,” he said.
Full Article: Savings.com.au
