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New Process for New SMSF's

Post Date:09/02/2010 | Author: Admin
Newly registered SMSFs will soon be identified on the Super Lookup website as “registered status not determined” rather than “complying”.
 
Once the first annual return for the SMSF is lodged and the ATO issues a notice of compliance for the SMSF, the status of the SMSF on the Super Lookup website will change from “registered status not determined” to “complying”.
 Previously, newly registered SMSFs were identified on the Super Lookup website with the status “complying”.
 The status of “registered” will also apply to all SMSFs which have not, to date, received a compliance notice (whether a notice of compliance or non-compliance).
 If a newly registered SMSF receives a notice of non-compliance, the status of the SMSF on Super Lookup will be shown as “non-complying”.
 A fund’s entry on the Super Lookup website will now take up to 7 days – to permit the ATO to try and identify sham SMSFs.
 However, the issue of the ABN for the newly registered SMSF will still be issued in accordance with current turnaround times.
 
 
The change has been made as part of the Government’s crackdown on illegal early release schemes.
 
It seems that early release scheme promoters often establish SMSFs as a means by which benefits can be transferred from other funds, passed through the newly established SMSF, and then simply paid out to the member (in breach of the payment standards).  This process takes place within a matter of weeks and the SMSF is often simply discarded.
 By identifying newly established SMSFs as registered, it is hoped that trustees who have received requests to transfer benefits to such funds will be particularly cautious in determining the bona fides of the request.
 
 
Newly registered SMSFs can still accept contributions and rollovers.  They will still qualify as complying super funds retrospectively from the date of their establishment (assuming of course that they are registered within the required time, there are no serious contraventions of the SIS operating standards, and the annual return is lodged).
 However, transfers from retail and industry funds will take longer, more information will have to be provided, and the whole process is likely to be more tedious.
 The Australian Prudential Regulation Authority will soon release guidelines for retail and industry funds as to how they should process transfer requests to newly established SMSFs.
 We suspect that the guidelines will require the transferring fund:
 
  • not to implement a transfer request until the SMSF appears on the Super Lookup register, and
 
  • to obtain more information in relation to the member requesting the transfer and the SMSF so as to ensure the request is legitimate (ie the request is not from someone posing as the member), and that the SMSF is not being used as a device for illegal early release schemes.
 
 
SMSFs which were registered during the 2008/09 tax year must have their audit completed and their annual return lodged by 28 February 2010.
 The ATO regards an SMSF’s failure to lodge its return by the due date as a significant marker of likely future compliance issues.
 To avoid the attention and stare of the ATO, get the annual return in on time.
 
 
The ATO is changing its attitude to SMSFs which are serial non-lodgers of their annual returns.
 The ATO is able to impose an administrative penalty (ie fines) for non-lodgement of annual returns.  In the extreme the ATO can issue a notice of non-compliance in relation to the fund and a default tax assessment.
 
 
The report of the long awaited and once-in-a-generation review of the Tax and Transfer system – known as the Henry Review – has been handed to the Government.
 Apart from leaks in the Press and a few titbits scattered by the Treasurer, we have no precise idea of the suggested changes or the Government’s response to those changes.
 It is possible that the 1,000 page report and the Government’s response will be released late February 2010 or early March 2010.
 
 
The ATO has recently released an Interpretative Decisions in relation to Anti?detriment payments. 
 These are payments a super fund can make to supplement the amount of a death benefit to offset the effect of contributions tax on the contributions used to finance the death benefit of a member.
 The Interpretative Decision – ID 2010/1 – confirms that anti-detriment payments can be made in
respect of adult children of the deceased member.
 
 
To achieve superannuation goals a disciplined approach to investment is required.  However, for SMSF’s this approach must also ensure that any investment decisions satisfy the prudential investment requirements of the SIS Act.  To assist Advisers and Trustees Michael Hallinan has produced a SMSF Investment Decision Tree which outlines the prudential investment requirements of the SIS Act in a manner which is easy to understand and apply when considering a particular investment decision.
 

 

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