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ATO Audit of SMSF Registration


Overview

When an application for a Self Managed Super Fund (SMSF) registration is lodged with the Australian Taxation Office (ATO) the ATO will issue to the Trustees a letter confirming that the SMSF’s Australian Business Number (ABN) has been registered and appears on the Australian Business Register (ABR). As the SMSF is required to be regulated as part of the ATO’s regulatory role, all applications for SMSF registrations are reviewed by the ATO and an Audit might be triggered if the Trustees have any outstanding ATO compliance issues (see some examples below):

  • Outstanding personal tax returns or poor payment compliance history;
  • Involvement with any other SMSFs of concern;
  • Previous involvements with companies with poor lodgement history;
  • Individuals that have been declared bankrupt.

According to the ATO, the objective of auditing SMSF’s registration is to ensure Trustees establishing an SMSF are:

  • Clear about the purpose in setting up SMSF;
  • Have considered whether an SMSF is the right vehicle for them;
  • Aware of the initial and ongoing costs involved in running an SMSF and understand the risks, time and resources required and compliance obligations.

Most important is to check that a new SMSF or individuals associated with it are not a risk of illegal early access or non-compliance.

The ATO will decide if the SMSF is eligible to be regulated and work out if, and how, the SMSF should be shown on the external register of super funds, Super Fund Lookup (SFLU). The status published on SFLU provides the stages of the registration process (see the table below):

Status on SFLU SMSF Registration Process What Does This Mean?
Election to be regulated being processed ATO is currently processing the registration This means an SMSF has applied to be registered with the ATO (i.e. ABN application has been made), but it hasn’t gone through or is in the process of being reviewed by the ATO.

At this stage, the SMSF cannot receive contributions or rollovers from third parties.
Registration Details Withheld ATO has some concerns This means the ATO still has concerns at the end of the review process and a request of review can be made after a certain period of time.

At this stage, the SMSF is registered but the SMSF cannot receive contributions from employers or rollovers from third parties. Personal Contributions are accepted.
Registered ATO has no concerns This means the SMSF is not a risk, or the initial concerns have been addressed during the review process.

This allows the SMSF to receive contributions and/or rollovers from third parties.

Step1
 

Your SMSF has been selected for the ATO audit for SMSF registration

If your SMSF has been selected by the ATO for an audit an ATO case officer will contact you by phone. The case officer will briefly explain to you what you need to do and a letter titled “We are auditing your application for self-managed superannuation fund registration” will be forwarded to your postal address. The purpose for the phone interview is so the ATO can determine whether all trustees have the capacity to operate the SMSF within super laws. The trustees will need to demonstrate to the ATO that they have the knowledge and understanding needed to perform the role of an SMSF trustee or responsible officer of a corporate trustee. The interview will be conducted over the phone and will need to be completed prior to a date stipulated by the case officer in the letter you receive. Important information about the roles and responsibilities of a trustee can be found here at www.ato.gov.au/smsf or the following links below:


Step2
 

What do I need to do to prepare for the ATO Phone Interview

Prior to the ATO phone interview you will be required to gather documentation about your SMSF. Some of the documents you may require are listed below and can also be obtained from your ESUPERFUND Client Portal under the menu tab “Dashboard – Supporting Documents” or “Documents – All Documents”.

Trust Deed ESUPERFUND Client Portal
Minutes of Meeting ESUPERFUND Client Portal
Investment Strategy ESUPERFUND Client Portal
Trustee declaration ESUPERFUND Client Portal
Member Statement Please contact your current Superfund for details
Bank Statement A copy of the application form can be downloaded from ESUPERFUND Client Portal

To prepare for the phone interview, you can also choose to undertake one of the ATO’s approved education courses here. These courses are available free and online. You are encouraged to undertake to improve your understanding of the obligations of an SMSF Trustee.


Step3
 

ATO Phone Interview

The phone interview with the ATO case officer will determine whether all trustees have the capacity to operate the SMSF within super laws. The trustees will need to demonstrate to the case officer that they have the knowledge and understanding needed to perform the role of an SMSF trustee or responsible officer of a corporate trustee. All Trustees must be present at the time of the phone interview with the ATO’s case officer.


Step4
 

Act before the Due Date

Importantly, you are required to complete the actions required within the scheduled due date. If you are unable to complete the requests before the due date, please make sure you contact the ATO’s case officer to seek alternative arrangements. Otherwise, your SMSF’s ABN will be at the risk of being cancelled by the ATO.


Step5
 

Audit Review Result

On completion of the audit of your application to be registered as an SMSF and regulated by the ATO , the ATO will notify you directly of the result. A letter titled “We have finished our audit of your superannuation fund registration” will be sent to your postal address and will detail if any further actions are required from you.

If the ATO is satisfied that you have provided them with enough information to complete your application they will list your SMSF on the external register, Super Fund Look Up (SFLU) with the status “Registered”. SMSFs with this status can accept transfers, rollovers, direct termination payments and contributions.

To the extent that the ATO’s case officer determines the Trustees were unable to demonstrate they have the capacity to operate the SMSF within super laws the ATO will withhold the ABN of your SMSF from the external register, Super Fund Lookup (SFLU). The SMSF’s status will remain as “Regulation details withheld”. This means your SMSF may experience delays when receiving rollovers from other super funds and receiving super guarantee payments from employers. Only Personal Contributions can be made to the SMSF. The reason for the decision will be detailed on the letter titled “We have finished our audit of your superannuation fund registration”.


Step6
 

Request to Review Audit Result

If you do not agree with the ATO’s decision to withhold the details of your SMSF from the external register, Super Fund Lookup (SFLU) and you still wish to proceed with the SMSF registration, you should ask the ATO for a review. A review request must be in writing, signed, dated and include the details of why you think the ATO’s decision is wrong. Further information about your right to request a review is detailed on the letter titled “We have finished our audit of your superannuation fund registration”.

In most cases, the ATO usually states that there is an opportunity for the SMSF to be listed on the SFLU after it lodges its first Annual Return. For example: Assuming your Fund was established on 31 July 2018 and the status is “Regulation Details Withheld”,

Case 1

You made personal contributions to the SMSF before 30 June 2019. Accordingly, the SMSF was activated in the 2019 Financial Year and 2019 is the first Annual Return. You can then make a request to review the audit result after the 2019 Annual Return is lodged with the ATO.

Case 2

You made personal contributions to the SMSF after 30 June 2019. Accordingly, the SMSF was activated in the 2020 Financial Year and 2020 is the first Annual Return. You need to submit a Return Not Necessary (RNN) Request for the 2019 Financial Year to the ATO and also lodge the 2020 Annual Return. You can then make a request to review the audit result with the ATO.

The ATO will then in turn make a decision on whether and how your SMSF will be displayed on Super Fund Lookup (SFLU).

We strongly suggest you contact your case officer directly for details in relation to the audit process and complete the audit review process as soon as you receive the ATO Audit letter. In some circumstances the ATO Case Officer will need to discuss personal affairs with you which ESUPERFUND is unable to advise or assist directly.