ATO Update: Collaboration progress – Enhancing the SMSF Client-to-Agent linking process

We are delighted to share an update on our collaborative efforts with the ATO aimed at refining the client-to-agent online linking process for SMSFs.

In a proactive measure to fortify the security of taxpayer information against fraudulent activities and identity theft, the ATO implemented a new verification protocol from November 13th, 2023. This protocol mandates that only authorised tax agents, BAS agents, or payroll service providers can establish links to an SMSF. Known as the client-to-agent linking protocol, this security enhancement impacts SMSFs seeking to nominate a new agent or make changes to existing agent authorisations.

Our recent virtual discussion group provided fertile ground for dissecting the challenges and opportunities arising from this updated security measure. Our focus during this initial discussion was dedicated to understanding the impact of this new protocol and exploring effective ways to assist agents adapt to the change.

One of the key issues that surfaced in our discussions was the challenge in executing SuperStream rollovers of refunds received subsequent to the winding up of an SMSF.

 That’s because traditionally, authorised agents were de-linked from an SMSF once the final annual return was processed, post-wind-up. Previously, to facilitate the rollover of any resulting refund using the SuperStream standards, agents would simply re-establish their link to the wound-up SMSF. However, with the new protocol in effect since November, re-linking requires explicit permission from the SMSF’s trustee, adding a layer of compliance.

In response to this, we engaged with the ATO to consider extending the de-linking timeframe for authorised agents on the wind-up of an SMSF. And, we are pleased to report a positive outcome – that the ATO has revised their process.

Now, the client-to-agent link will only be terminated 28 days after the SMSF’s wind-up has been processed, aligning with the period during which the SMSF’s ABN remains active. This alignment facilitates the completion of necessary rollovers before an authorised agent is de-linked and the SMSF is deregistered from SuperFund lookup.

For those impacted, the ATO has also reactivated client-to-agent links for SMSFs that were wound up since the initiation of the new protocols, ensuring these funds can complete rollovers within this 28-day window.

We applaud the Regulator for their swift and practical response to this issue. This change significantly eases the compliance burden for both trustees and agents, ensuring smoother rollover processes.

Our commitment to working alongside the ATO to streamline these processes remains steadfast. We encourage our members to reach out to us at [email protected] with any concerns or queries.

Our objective remains clear: to facilitate a seamless and efficient process for all authorised agents and their SMSF clients. In line with this, we are actively developing additional information to assist industry participants with the transition to the new protocol.

In the meantime, if you would like to know how these changes may impact you, please read our previous article.

Written by Mary Simmons,  Head of Technical