From June 2016, Australian SMSF Audits will be placing news and other information relating to SMSFs onto our Facebook page.
Regulations concerning the registration of SMSF is now in place. From 1 July 2013, the independent audit can only be undertaken by a registered SMSF Audit. Registrations are controlled by ASIC and can be confirmed from the ASIC website. It is the responsibility of the Trustees to ensure that the auditor engaged to undertake the audit is registered.
Eric Taylor, the principal of Australian SMSF Audits is a registered SMSF Auditor.
From 1 July 2012, regulation 4.09(e) requires all SMSFs to include in their Investment Strategy whether there is a need for the Fund to hold a Contract of Insurance for members. Has your Investment Strategy been updated to cater for this requirement? The Fund’s auditor will need to sight your updated Investment Strategy to ensure that it complies. A contravention will occur if the strategy does not comply
Trustees are now required to “review regularly” their investment strategy. While the term “regularly” is not defined, it should be done annually. Furthermore, if a Fund’s investments do not comply with the Fund’s strategy, it indicates the strategy has not been reviewed and a contravention may have occurred.
PENALTIES FOR SMSF TRUSTEES
*** UPDATE *** In December 2013, the new Federal Government has announced the legislation will be reintroduced. The penalties will apply from 1 July 2014.
The legislation that was to bring in the penalty regime, detailed below, lapsed when Federal Parliament was prorogued.
Effective from 1 July 2013, the Commissioner of Taxation will have the power to impose penalties on Trustees of SMSFs where there is a contravention of the SIS Act. Penalties can range from 5 to 60 penalty units for each contravention. A penalty unit is currently $170, so penalties can range from $850 to $10,200. The Commissioner can also direct Trustees to undertake specific education. Any penalty issued by the Commissioner is payable by the Trustee and cannot be paid or reimbursed by the SMSF.
REPORTING OF FUND ASSETS
From the 2013 financial year, SMSFs are required to report all Fund assets at market value. Market value is confirmed as the amount a willing buyer would pay to a willing seller in an orderly arm’s length transaction with proper marketing and both parties acting knowledgably and prudently. Failure to do so could lead to a penalty. Auditors will need to sight evidence of how the value was attained.
Super News will be updated by Australian SMSF Audits from time to time.