What Should You Do If Your SMSF Has a Compliance Breach?
If you identify a compliance breach in your SMSF, notify your SMSF Service Provider immediately, avoid attempting to correct it yourself before getting advice, and be aware that your SMSF Auditor may be required to report certain breaches to the ATO through an Auditor Contravention Report.
What counts as an SMSF compliance breach?
A breach occurs when the fund's actions don't comply with the SIS Act, its regulations, or the fund's own Trust Deed. This can range from a related party transaction at the wrong price to exceeding the in-house asset limit or missing a lodgement deadline.
What should I do first if I discover a breach?
Report it to your SMSF Service Provider as soon as you become aware of it, rather than attempting to reverse or correct it yourself first. How a breach is rectified can affect how it needs to be treated and reported.
Will my SMSF Auditor have to report the breach to the ATO?
SMSF auditors have an obligation to report certain contraventions to the ATO through an Auditor Contravention Report. A recurring breach, or one left unaddressed, is treated more seriously than an isolated matter that's identified and dealt with promptly.
What is voluntary disclosure and when is it appropriate?
For some breaches, voluntarily disclosing the matter to the ATO before it's identified elsewhere may be an appropriate path. Whether this applies depends on the nature of the breach and should be discussed with your SMSF Service Provider.
Frequently asked questions
What is an Auditor Contravention Report (ACR)?
It's a report an SMSF auditor is required to lodge with the ATO where certain contraventions of superannuation law are identified during the audit.
Can a breach be fixed without penalty?
Early identification and correction, ideally with voluntary disclosure where appropriate, generally leads to a better outcome than a breach discovered during an audit or by the ATO directly.
Do all SMSF breaches need to be reported to the ATO?
Not every breach is reportable, but auditors are required to assess and report certain contraventions in line with ATO guidelines, so it depends on the specific circumstances.
Discovered a possible compliance issue with your SMSF? Contact Lifetime SMSF on 1300 031 943 or visit lifetimesmsf.com.au to talk to a specialist.
This information is general and factual in nature. It is not financial product advice, legal advice or tax advice. Lifetime SMSF Pty Ltd is not licensed to provide financial product advice under the Corporations Act 2001. If you require personal advice, consult an appropriately licensed or authorised financial adviser.