At the SMSF Association (formerly SPAA) National Conference, being held this week in Melbourne, the ATO has confirmed they are taking a new approach when an Auditor Contravention Report (ACR) is lodged for an SMSF.
The ATO will now telephone trustees of SMSFs (or directors where there is a trustee company) when they receive an ACR to check the trustees or directors are aware of the breach, how it occurred and the action being taken to remedy it. The ATO is aiming to make the call very shortly after the ACR is lodged.
The situation will be escalated to an audit if the trustees or directors are:
- unaware of the breach and how it occurred, and cannot discuss the remedial action;
- unwilling to talk to the ATO; or
- unhelpful when the contact occurs.
If a contravention is identified on an audit, an automatic administrative penalty will apply.
This means that, when an ACR is being lodged for an SMSF, advisers should ensure the trustees or directors are aware they will be very shortly contacted by the ATO and are equipped to discuss the breach and the remedial action under way.