Greater Focus on SMSFs Tax Agents

The Assistant Commissioner, in the same speech, indicated that the ATO will increase, compared to previous years, the attention given to testing SMSFs’ tax compliance for the 2009/10 compliance program.  In previous years the emphasis was on SMSFs’ compliance with the SIS standards.

This change in emphasis has arisen because of a high percentage of misreporting and calculation errors within SMSF Tax Returns.

As 98% of SMSF returns are lodged by tax agents, the ATO takes the view that the problem is with tax agents rather than with the trustees.

For the first time the ATO intends to undertake office visits to tax agents.  These visits will focus on the correct understanding of specific SMSF annual return income/deduction labels.

Common mistakes in SMSF tax returns which have been identified by the ATO are:

• Residency of SMSFs – misapplication of the rules to determine whether the SMSF qualifies as an Australian resident superannuation (which is a prerequisite for the fund to qualify as a complying super fund)
• Non-arm’s length income – this income is not being correctly reported
• Capital gains being incorrectly classified and reported as “other income”
• Exempt current pension income – calculation errors in determining the amount of this type of fund income.