ATO increases scrutiny of SMSF compliance and lodgements

The Australian Taxation Office (ATO) is increasing its scrutiny of Self-Managed Superannuation Funds (SMSF), specifically targeting late-run Limited Recourse Borrowing Arrangements (LRBAs). Following the announcement and commencement of new LRBA laws, the ATO noted over 13,000 new SMSF registrations and is monitoring for individuals who may have attempted to implement arrangements in violation of the new regulations.

In addition to LRBAs, the ATO is focusing on illegal early access to funds and prohibited loans. While auditor contravention reports have increased, officials noted this is largely due to a rise in reported administrative breaches, such as failing to report assets at market value or failing to maintain trustee minutes.

Furthering its enforcement efforts, the ATO has utilized court action to penalize a South Australian trustee for failing to lodge annual returns for three consecutive years. The trustee was ordered to appear in the Magistrates Court and received a fine and a criminal conviction. The South Australian Supreme Court upheld the ruling, emphasizing that the legal responsibility for lodgement rests with the trustee, regardless of whether an accountant was responsible for the delay.