Genuine misconduct needs to be identified and addressed promptly, without subjecting compliant funds and their members to unnecessary complexity and excessive administrative burdens, the SMSF Association has said today.
In its submission to the Australian National Audit Office’s (ANAO) performance audit of the Australian Taxation Office’s regulation of self-managed superannuation funds (SMSFs), the SMSF Association raised concerns that relatively minor or inadvertent conduct can attract substantial and disproportionate consequences while some serious or repeated non-compliance may remain unresolved for lengthy periods.
The Association cited the administration of the non-arm’s length income rules as a standout example, while recognising that the statutory settings are a matter for Government.
SMSF Association CEO, Peter Burgess said, “We fully support a regulatory framework that is firm where it needs to be, practical in its administration, clear about the scope of the ATO’s role and supportive of trustees and professionals who are committed to doing the right thing.”
The Association also highlighted the operational consequences of late SMSF annual return lodgement.
“Timely lodgement is essential, but a short delay can disrupt contributions and rollovers, creating additional work and uncertainty for members and employers well beyond the overdue return.
“We want proportionate responses and pragmatic resolutions that support compliance without imposing consequences beyond what the underlying risk warrants.”
The submission also asks the ANAO to examine the ATO’s public advice and guidance framework, including its reliance on non-binding web content, the currency of SMSF-specific rulings, and access to authoritative advice on SIS Act issues.
“Clear, timely guidance is a frontline compliance tool. It helps prevent inadvertent breaches and allows enforcement resources to focus on genuine integrity risks.
“Web content has an important role, but trustees and professionals also need durable, authoritative explanations of how the ATO applies the law, particularly where the consequences are significant.”
The Association, separately called for an effective technical issues resolution mechanism following the cessation of the former NTLG Superannuation Technical Sub-committee.
“We value our engagement with the ATO, but industry also needs a clear pathway to resolve recurring technical issues, with clear ownership, progress updates and reasoned outcomes.”
The submission also raises the use of Auditor Contravention Reports as a regulatory data source, including materiality settings, the distinction between administrative and substantive breaches, and the limited feedback available to auditors about how reports are used.
“SMSFs now hold more than $1 trillion in retirement savings. The regulatory framework must be robust and trusted, but it must also be practical, transparent and focused on the risks that matter most.
“Our objective is a system that is firm where it needs to be, supports trustees and professionals who are trying to comply, and gives the ATO the best possible information and tools to act quickly where genuine integrity risks arise,” Mr Burgess said.
Read the full submission here