Five most common errors SMSF owners make
Acknowledging that everyone makes mistakes, the ATO has revealed the top five errors made in SMSF annual returns.
The Tax Office has published a list of the most common mistakes made in SMSF annual returns (SARs) and tips to help owners avoid them when lodging their SAR this year.
Bank account not unique to the SMSF
The ATO said that there must be a bank account in the fund’s name to manage the SMSF operations and to accept contributions, rollovers of super and income from investments.
The account must be separate from the trustees’ individual bank accounts and any related employers’ or advisers' bank accounts.
"This will protect your fund's assets and ensure super payments can be made to your SMSF," the ATO said.
Providing an incorrect electronic service address (ESA)
According to the ATO, an ESA allows an SMSF to receive electronic remittance advice and contributions if members are receiving super from non-related employers.
An ESA consists of alphanumeric characters with a combination of upper and lower case characters and is case sensitive. It's not an email address or the contact details of the SMSF messaging provider.
Not valuing SMSF's assets at market value
SMSF assets need to be calculated at market value as at 30 June to prepare the accounts, statements and SAR. The ATO advised owners to follow its valuation guidelines, adding that it generally accepts these valuations.
"Accurate asset valuation is important to ensure your SMSF retains its complying fund status," it said.
"Penalties may apply for inaccurate valuations as these can have an impact on your members' balances."
Trying to lodge with zero assets
An SMSF is not legally established until the fund has assets set aside for the benefit of members.
"We won't accept a SAR from an SMSF that has no assets unless the fund is being wound up," the Tax Office said.
It explained that if this is the SMSF's first year and it has no assets set aside for the benefit of members, owners can ask the ATO to either cancel the fund's registration or flag the SMSF's record as return not necessary.
Lodging a SAR without auditor details
Finally, the ATO advised that an approved auditor must examine the SMSF's financial statements and assesses the fund's compliance with super law before the SAR can be lodged.
A SAR lodged without auditor's details, will be suspended and not recognised as a lodgment. This will impact the complying status of the fund until the SAR is lodged with the required information.
"Appoint an auditor at least 45 days before your SAR is due, to ensure the audit is completed in time to meet the lodgment date," the ATO said.