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  • Matt Heighway

What To Do If You Have Overdue SMSF Annual Returns

In a recent presentation at the SMSFA national conference, the Australian Taxation Office (ATO) advised that of the 22,000 newly established SMSF’s in 2020, 25% of the SMSF annual returns remain unlodged. They are what the ATO call “never lodgers”. The ATO estimates that there are in excess of 150,000 SMSF’s that currently have overdue annual lodgement obligations. This number is massive and concerning when it comes to retirement savings and my guess is that there are many SMSF trustees with their heads in the sand when it comes to these late lodgements.


Is this you?


You know something needs to be done and it is creating a great deal of anxiety, but you are not sure where to turn or what to do so it sits in your too hard basket. Unfortunately for you this problem won’t go away and could potentially cost you your dream retirement. For whatever reason you find yourself in this position it is important that you get on top of your SMSF lodgements ASAP.


It is important for you to be aware of your obligations when it comes to the management of your SMSF. Whilst SMSF’s come with the freedom to manage your own path to retirement, they also come with the burden of managing your compliance. As many unfortunate trustees have found out, compliance issues in SMSF’s will not just go away and if you have entered into an SMSF without some degree of knowledge and guidance, the old “you don’t know, what you don’t know” can jump up and bite you.


It is my experience that some SMSF trustees find themselves in the situation where they have a few years of lodgements overdue, not because they are intentionally doing the wrong thing but because they have received poor or no support from the professionals they hoped to rely upon.


What happens when you don’t lodge?


If your SMSF Annual return is overdue by more than 2 weeks, you risk the status of your SMSF being changed from ‘complying’ to ‘regulation details removed’ on Super Fund Lookup. This means that your SMSF may be essentially frozen, and the following may occur:

  • Your SMSF may not be able to receive rollovers

  • Your SMSF may not be able to receive contributions

  • Your bank may stop you from making withdrawals from the SMSF

  • Applications for new accounts and investments may be rejected by providers

In addition to the above the ATO may impose penalties for non-lodgement.

It is also important to note that there are other lodgement obligations for SMSF’s in additional to the SMSF Annual Return. The introduction of event-based reporting for SMSF’s means that certain transactions and events require reporting throughout the year as well.


Trustee Responsibilities reminder


When it comes to lodgement obligations, it is easy for trustees to lay blame on their Accountant, and whilst in some case this may be fair, the ultimate obligation for the administration of an SMSF sits with the Trustee. SMSF trustees have a number of administrative, reporting and record-keeping obligations to ensure their SMSF’s compliance with super legislation. If the SMSF was established correctly you would have signed a Trustee Declaration within 21 days of your appointment. By signing this, you acknowledged the following trustee responsibilities (amongst others) outlined in the document.


You understand that the trustees of the fund must:


  • ensure that the following are prepared and retained for at least five years:

    • an annual statement of the financial position of the fund

    • an annual operating statement

    • copies of all annual returns lodged

    • accounts and statements that accurately record and explain the transactions and financial position of the fund including asset market valuation

    • copies of Transfer balance account reports lodged

    • copies of any other statements you are required to lodge with us or provide to other super funds

  • appoint an approved SMSF auditor each year, no later than 45 days before the due date for lodgement of the fund’s annual return and provide documents to the auditor as requested

  • lodge the fund’s annual return, completed in its entirety, by the due date

  • review the independent audit report received from the approved SMSF auditor and take action as required


There is often the misconception that these responsibilities fall on the Accountant or Adviser of your SMSF. This isn’t true but finding an Accountant or Adviser that will make these responsibilities simple for you is essential.


What can you do?


Well, what you shouldn’t do is wait any longer. You may actually be compounding the problems without realising it. If you do have compliance issues that you are unaware of, doing nothing will make things worse and the fix may not be a difficult as your think. You need to reach out to an SMSF Accountant that has experience in fixing problems in SMSFs who can work with you, the ATO, and the SMSF’s auditor to get lodgements up to date. This may be a simple process if you only have a couple of years late and no compliance issues or this could be a large project if you have many years overdue or there are some complex compliance issues. The sooner you re-engage with your SMSF and make a start on fixing things up, the more likely you will be able to get your hands on the information required and get yourself back on track to your dream retirement.


If you find yourself in this situation, our SMSF rescue service will get you unstuck and either rescue your SMSF so you can get back to using this vehicle to build for retirement or wind your SMSF up if you no longer feel that an SMSF is right for you. Don’t waste any more time and get a quote here.


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