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March 2007
ATO priorities on regulating SMSFs
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 Lawyer in Profile  Geoff MusgrovePartner, Commercial Group Phone: 03 9288 0555 Geoff Musgrove is a partner in our Corporate & Commercial group. His principal areas of practice are commercial contracts, mergers, acquisitions and disposals, joint ventures, intellectual property, Corporations Law, insolvency and information technology law. Geoff has acted for a wide range of commercial, government, accounting, manufacturing, professional and rural industry clients. He advises them on contract negotiations, acquisitions, disposals, joint ventures, reconstructions, insolvency, amalgamations, commercial litigation, computer contracts, franchise agreements, commercial property transactions, tax planning and intellectual property. Recent experience includes the merger of a large accounting practice with a listed public accounting practice, the disposal of businesses in the middle market, advice on resolution of shareholder disputes, drafting joint ventures and licence agreements, advising on the conduct of board meetings and reviews of company constitutions. Geoff has also been involved in the establishment of ADVOC Asia, a consortium of Asian- based law firms. Geoff provides advice to our clients forming business relationships in the Asian region and to overseas clients doing business in Australia.  
Recent speeches by the ATO's Commissioner and Deputy Commissioner have given an insight into the ATO's regulatory priorities for SMSFs in the new 'Simpler Super' world.
Julian Smith
Increased funding for ATO regulationThe Plan for Simpler Super specifically includes more and better regulation of SMSFs - including:
Simpler annual return for SMSFsA new annual return document will replace the existing: regulatory return, income tax return and member contribution statement. This will simplify SMSF administration and may improve the consistency of information SMSFs provide. Trustees to sign declarationAll new SMSF trustees will have to sign a declaration stating they are aware of their obligations as trustees and of their regulatory obligations. The ATO's increasing focusEven though the ATO has gradually increased the intensity of its supervision of SMSFs in recent years, the ATO now plans to 'triple [its] casework for self managed superannuation funds' over the next two years. This reflects the ongoing change in the ATO's approach from an educational approach to a more active 'compliance verification program' involving site visits aiming to establish positive compliance early in a fund's life. Presumably this is some extension of the current system in which the ATO notifies funds if there is an obvious compliance issue - such as a single individual trustee of a fund. The ATO also plans to revise and re-issue its educational tools in light of Simpler Super. The ATO and SMSF auditorsIt seems the ATO sees its supervision of SMSF auditors as a key way to improve SMSF compliance. This supervision will involve the ATO reviewing an auditor's processes looking for compliance issues that may lead to direct SMSF audit. Leniency unlikelyPerhaps as a consequence of the ATO's move towards more active compliance it has not disclosed an intention to allow SMSFs any leeway in coming to terms with Simpler Super. For example, the Deputy Commissioner made this clear in her speech of 7 March 2007 when she said 'I've been asked whether we will allow period [sic] of grace to allow trustees of self managed funds to get used to the new self managed fund rules. The short answer is no.' This approach seems reasonable given that the law on the main compliance problem areas is not changing fundamentally, see below. Typical problem areasReported problem areas with SMSF compliance continue to cover similar ground. The auditor contravention reports lodged since the system was introduced in July 2004, breakdown as follows:
More informationFor more information on the ATO's approach:
For more information in relation to Simpler Super generally, please contact Maddocks on 03 9288 0555 or 02 8223 4100 and ask for a member of the Maddocks Superannuation Team.
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