“SMSF Auditor Failure to Qualify Opinion, leading to losses for Trustee’’ On 23 May 2018, the NSW Court of Appeal handed down a decision…
The temporary Transitional CGT relief available to trustees of self-managed super funds commenced on 1 July 2017.
Industry commentators have noted that many professionals failed to appropriately analyse asset positions before the lodgment of their client’s 2017 SMSF tax return, and as a result have potentially introduced previously tax-free capital gains into a taxable environment; or, potentially removed the ability to apply capital losses resulting in unnecessary capital loss wastage.
This year the ATO intends to make the reviewing of compliance of SMSF auditors a focus. As part of the this intiative the ATO is preparing to audit around 300 SMSF audit firms over the course of the year.
To date they have already referred 30 firms to ASIC, predominantly due to concerns regarding sufficient evidence, and independence. Independence in particular has been noted as a key concern of the ATO. As a result they have requested that auditors identify threats to their independence and build in safeguards against those threats where necessary.
Some of the threats noted include the following:
- Reciprocal Audit arrangements – Where a firm audits their own SMSF auditor’s fund. In both the ATO’s and ASIC’s view this may give rise to familiarity, self-interest and possible intimidation threats;
- A family relationship between the SMSF auditor and their referral source;
- Two partner accounting firms where one partner audits the financials prepared by the other Partner;
- Single partner firms where the staff are preparing the accounts and the sole Auditor is signing off on the accounts directly
From 1 July 2018 an individual aged 65 or older will be allowed to contribute up to $300,000 into superannuation from the proceeds of selling a home that has been owned for the past 10 or more years. The contribution is known as a downsizer superannuation contribution (DSC). A DSC can be made without reference to the age test, the work test and the 1.6m total superannuation balance limit.