No. 56: Your Self Managed Superannuation Fund (SMSF) status will change if its income tax return is overdue

From 1 October 2019, if an SMSF is more than two weeks overdue complying with any annual income tax return lodgement due date and hasn’t requested a lodgement deferral, the Australian Taxation Office (ATO) will change the status of the fund on Super Fund Lookup (SFLU) to ‘Regulation details removed’.

How will this change affect my SMSF?

Having a status of ‘Regulation details removed’ means –

  • other superannuation funds won’t roll over any member benefits to the affected SMSF;
  • the affected SMSF may have problems rolling benefits to another fund; and
  • employers will not be able to make any super guarantee (SG) contribution payments to the  fund in regard to members of the SMSF.

The SMSF regulator recently reinforced the legal responsibility for SMSF trustees to lodge an annual return each year and on time, citing their view that non-lodgement combined with disengagement suggested that retirement savings may be at risk. The changed status will remain until any overdue lodgements have been brought up to date.

What is the new process?

On the first business day of each month, there is now a two-step process for updating SFLU.

  1. Where an SMSF trustee hasn’t lodged their SMSF annual return on time and it is more than two weeks overdue, the ATO will change the regulation status to ‘Regulation details removed’ on SFLU.
  2. Where all overdue lodgements are submitted for an SMSF during the previous month, the ATO will update SFLU to reinstate the SMSF’s ‘complying’ status.

What must SMSF trustees do?

SMSF trustees are ultimately responsible for running their SMSF and it is important all trustees understand their duties, responsibilities and obligations. There are significant tax consequences and penalties that can be applied if SMSF trustees don’t run the SMSF in accordance with the superannuation laws. All SMSF trustees should familiarise themselves with the superannuation laws – a good starting point is the ATO document ‘Running a self-managed super fund’

Lodging your self-managed super fund (SMSF) annual income tax return before its ATO lodgement due date is a fundamental part of your obligations as an SMSF trustee. In order to meet lodgement deadlines (and to enable financial statements to be prepared and audited) it is crucial you provide all supporting records required to prepare your SMSF’s annual compliance work at least two months in advance (and preferably much earlier) of the lodgement due date.

If your SMSF has outstanding lodgements, we encourage you to contact your Blaze Acumen advisor ASAP to discuss how the changes may affect you with a view to putting in place a plan to be fully compliant.