ATO Audit

When a Fund is set up, the ATO sometimes initiates an audit on the newly established SMSF.

When we set up a new SMSF with the Tax Office, the ATO generally does a comparison between the data that we entered as part of the Application compared to the Trustee’s details on their end.

Sometimes, due to a typo or other errors, the information that we entered may not match the info on the ATO’s records. These discrepancies may result in a manual intervention by the ATO. It can then take up to 28 days for the ABN of the new SMSF to be released. For more details on the set up times, please click on the button below:

Furthermore, after the ABN of the Fund has been issued by the ATO, the Tax Office may do a review on the Fund as well as the Trustees in the Fund. The objective of the review is to ensure that the associates of the SMSF do not have any ATO compliance issues for example:

  • Outstanding personal tax returns
  • Involvement with another SMSF whose tax return has not been lodged up to date
  • Previous involvements with companies or individuals that have been declared bankrupt

If the Trustees have any outstanding ATO compliance issues, an ATO audit might be triggered.

Next steps if there is an ATO audit on the SMSF

Generally, the ATO will first withhold the ABN of the Fund. Once the ABN of the Fund is withheld, the Fund is unable to accept any rollovers. On the Super Fund Look Up website, the ABN of the Fund will appear per the print noted below:

ABN Withheld

An ATO officer may then be assigned to the Fund and a notification letter is sent to the Trustee. For a sample of the notification letter, please click on the button below:

If a letter is issued, the Trustees will be required to arrange for a Trustee interview with the ATO. The purpose of the interview is to test the Trustee’s knowledge of the responsibilities of being a Trustee. To prepare for the interview, Trustees can choose to conduct a free online training here.

How we can help

If we are the accountant for your Fund, we will assist you with the ATO audit process without an additional charge. We will draft a response letter to the ATO officer and assist you in collecting all of the supporting documents required by the audit notification letter. If Trustees are satisfied with the response letter that we drafted, we will contact the ATO officer on behalf of the Trustees and send them the required documents.

What happens after an ATO audit

The objective of the ATO audit is to display the status of the Fund as a complying SMSF. If the ATO identified potential issues, they will come to one of the following decisions (click to expand):

ABN status of the Fund continues to be withheld
ABN of the Fund is cancelled

To minimize the chance of an ATO audit, Trustees should ensure that their personal tax affairs are current before setting up an SMSF. To proceed with the SMSF set up, please click on the button below:

 

  • Sunny Day

    Hi, I recently got a local business to set up a SMSF for me and the initial costs were to come out once the fund was set up. I got reviewed by the ATO and after that lengthy conversation with the ATO, I was advised by the ATO officer that it would not be approved for various reasons. I’m all good with this but now the local business still wants to charge me $330 for his setup work. Do I have to pay this even though the fund was never set up?

    Thanks for your help!

    • Hein Preller

      Sunny,

      The ATO conducts various checks to assess a Trustee’s suitability to run an SMSF.

      If you have a history of late lodgements for personal tax returns or entities you are involved with, the ATO may argue that you may not lodge the SMSF returns on a timely basis. This is not a process the accountant can decide on, its the ATO making this decision. So the accountant may have done all he can to address potential concerns the ATO may have – this is what we do for our clients if there’s an ATO audit. On the basis the accountant you used executed the SMSF set-up and assisted with the ATO audit, its the right thing to pay for the service you used. We explain more on ATO delays here:

      https://www.smsfwarehouse.com.au/smsf-setup/set-up-times/

      Keep well,

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Superannuation Warehouse is an accounting firm and do not provide financial advice. All information provided has been prepared without taking into account any of the Trustees’ objectives, financial situation or needs. Because of that, Trustees are advised to consider their own circumstances before engaging our services.