New tax office requirements mean the need for trustees of self-managed super funds (SMSFs) to get professional advice has never been more important, says the SMSF Professionals’ Association of Australia (SPAA).
This follows an announcement by the Australian Taxation Office (ATO) that it has increased its monitoring of the sector.
In its Compliance in Focus briefing delivered to the industry this week, the ATO said it intended to increase audits of SMSF trustees for both their regulatory and income tax compliance.
The ATO expects to audit 1100 funds for income tax compliance and 15,100 funds for regulatory compliance in 2013/2014.
Badly served
While many trustees are resistant to seeking financial advice, the latest warning only increases the potentially onerous task of being an SMSF trustee
Or as Andrew Meakin, executive director of dealer group Shartru Wealth, recently told Professional Planner, advisers need to improve their skill sets and present themselves as far more than simply investment advisers to SMSF trustees, who often have good reason to mistrust investment experts.
“They’ve been poorly serviced, poorly invested or had some other bad experience,” he said. “So the challenge for advisers is to go up the skill curve.”
Specific targets
The SMSF Professionals Association of Australia (SPAA) senior manager of technical and policy, Jordan George, adds that it is critical SMSF trustees are aware that their running of their SMSF will be under even greater scrutiny in the future.
“The ATO is specifically targeting prohibited loans, related-party transactions, SMSF return lodgement and funds with a history of non-compliance,” he said.
“In this environment, SMSF trustees need to ask themselves whether they are getting the best possible advice and if they aren’t, is it worth risking their funds’ complying status. Being made non-complying can severely damage trustees’ retirement plans as their funds lose their superannuation tax concessions.”
George says the ATO overview also highlighted the fact the SMSF sector is complying with the law, the decision to increase monitoring notwithstanding.
“The ATO reports that 98 per cent of SMSFs complied with the law in the 2012/2013 financial year. This confirms what SPAA has been saying – that the SMSF sector is a healthy, compliant and well functioning sector of the superannuation industry, simply confirming what the Cooper Review stated in its final report in 2010.”
Based on this article, legal advice would be more relevant than listening to financial planners who don’t have the same professional responsibility and knowledge as legal practitioners.