ATO Audits 300 SMSF Auditors 2018

The ATO will action over 300 audits of registered SMSF Auditors and are already underway with this action. The inherent and underlying factor behind this move from the ATO is to ensure the independence and integrity of all SMSF Approved Auditors auditing processes.

This action was sparked by the ATO as a way to determine whether there was compliance with APES 110 as numerous auditors have been referred to ASIC for assessment of their “Independence” and their Competency in the discharging of their auditing duties.

As many as 117 SMSF Auditors have been deregistered by ASIC in the last 12 months, pending further investigation, and this is a direct result of the ATO’s action to audit SMSF Auditors throughout the Financial Year of 2017/2018.

The ATO has identified characteristics in deregistered SMSF Auditors during their auditing process:

  • Auditors performing audits on those that manage the Auditor's personal SMSF.
  • A family relationship between the SMSF Auditor and the SMSF they are auditing.
  • Partners within firms auditing one another’s portfolio of SMSFs.
  • Sole auditor within the firm signing off on staff member audits.
  • Lack of compliance within asset valuation in line with the recent legislation changes.
  • Absence of evidence and sufficient record-keeping of SMSF auditing.
  • Not building safeguards to ensure independence compliance in auditing processes.

This has been a harsh lesson to learn for many SMSF Auditors. The subsequent deregistration of many SMSF Auditors by ASIC has shown the extent of why this was necessary and why the ATO will continue to carry out these arbitrary audits.

As part of the auditing undertaken by the ATO, Super Audits has recently been reviewed by ATO Practice Review Audit and satisfied the ATO’s criteria in every respect. Any current and future clients can rest assured that Super Audits have and always will maintain the highest standards of professionalism, competency, and independence to meet the expectations of all regulatory authorities, trustees, and clients which has an always will be our highest priority.

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The Transition of Retirement Income Streams

 When an SMSF member decides to transition to a retirement income stream (TRIS), it’s imperative to know the legislation and correct procedures. 

Commencing a TRIS
Steps to commencing a TRIS as stated on the ATO website:

  1. Establish the amount of benefits, assets, and liabilities a member has in their SMSF;
  2. determine the amount of each preservation class of benefits the member has;
  3. if the member commences a TRIS with an amount less than their total super benefits, you can allocate the preservation classes of the member's benefits to the TRIS; and
  4. upon commencing to pay a TRIS, you must determine the amount of the tax-free and taxable components of the separate interest.

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SMSF Compliance Traps with Bitcoin and other Crypto Currencies

With bitcoin prices surging by 1,000% in the last 12 months, we are seeing a growing number of SMSF holders investing in the cryptocurrency. It is important that Auditors and Practitioners are aware of the compliance traps associated with bitcoin to ensure they manage their SMSF’s correctly.

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How Will Downsizer Contributions Work for SMSFs?

As of July 1, 2018, downsizer contributions for super funds will come into effect.

The following steps are required for an SMSF member to be eligible:

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Transfer Balance Cap Explained

A transfer balance account is how the ATO track super transactions and amounts during a person’s retirement phase. The amount in your clients transfer balance account will determine whether or not they have exceeded their transfer balance cap. The limit on the amount someone can hold in retirement phase is currently (in 2017-2018) is $1.6 million.

It’s important to note that clients will begin to have a transfer balance account from the 1st of July 2017 if they are already receiving a retirement phase income stream at the end of June 2017. Otherwise, it will be on the day they first commence receiving a retirement phase income stream.

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