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Draft reporting regulation to exacerbate late lodgements, penalties

The Treasury’s proposed 45-day preparation requirement for SMSF financials will not address issues with late-lodging SMSFs and will instead lead to further late submissions and substantial penalties, says the Institute of Public Accountants.

SMSF Miranda Brownlee 18 November 2020
— 1 minute read

As part of a consultation on a range of miscellaneous amendments to portfolio laws, the Treasury recently proposed a new regulation which would require the accounts and statements of an SMSF to be prepared at least 45 days before the day the return is due.

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The proposed measure has already generated some backlash from the SMSF industry, with both the SMSF Association and The Tax Institute outlining a number of concerns.

The Institute of Public Accountants (IPA) has also made it clear that it does not support the proposed reporting measure, labelling it as a blunt instrument which will be difficult to administer.

The IPA said in the submission that it supports efforts to ensure timely lodgements, and appreciates the fact there are issues with a number of funds lodging late and the ATO having no authority to issue penalties.

“We also appreciate that this is an attempt to align the requirement to prepare accounts with the latest date by which an auditor can be appointed. However, we do not believe the proposed amendment is going to address the issue of encouraging timely lodgements,” the IPA said.

“It will instead place increased pressures on accountants which is likely to result in further late submissions and substantial penalties, likely then to be the subject of remission appeals, resulting in an increased workload for the ATO also.”

The submission pointed out that there are already many opportunities available for the ATO to encourage timely lodgement, including being able to remove a fund from the Super Fund Lookup register.

“Such action disallows employers from being able to make any super guarantee contributions for the SMSF members,” it stated.

One of the key impediments to the 45-day deadline, it said, is the “practical reality of non-compliance for those funds having an earlier lodgement date of 31 October not being able to prepare their accounts by mid-September”.

“Many of the managed funds that they rely on do not publish their information until late September and in many cases early October,” it said.

“This change would unfairly impact newly established SMSFs and those funds that have lodged the annual return late in a prior year. If such funds have investments in managed funds which do not report until the end of September, it represents an unrealistic time frame.”

Draft reporting regulation to exacerbate late lodgements, penalties
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