‘Flimsy’ audits in ATO’s sights

Written by Miranda Brownlee Friday, 19 February 2016

The ATO will be upping its focus on SMSF audit providers who offer cheap and automated services, with the regulator skeptical that an adequate level of processing is being conducted on these audits.

Speaking at the SMSF Association national conference in Adelaide, ATO commissioner of taxation Chris Jordan said one of the main issues the ATO sees with audits is poor-quality documentation.

“The documentation to prove they did the audit just doesn’t exist, or it’s really flimsy,” said Mr Jordan.

“And I keep coming back to those low-cost ones. With those low-cost ones how can you make a dollar? How can you make money out of a $200 audit by the time you’ve done all the processing around it? That’s a pretty difficult thing.“

Mr Jordan said these low-cost audits would continue to be on the ATO’s “risk profile”.

"I see these automated $200 online audits. What’s that about? You never meet anyone, you send some documents, and you get your certificate back. What real value is that adding?" he asked.

“What do they really do? I send you some documents and you look at it and send a certificate. Who are you? Where are you? What do you actually do, if anything?”

Mr Jordan said the ATO is conducting 59 full audits, which given the size of the market, he added, was not a bad statistic.

“At the end of December 2015 we undertook integrity checks of 2,200 newly registered SMSFs and we excluded some 300 trustees from the system and we imposed operating restrictions on a further 800 new SMSFs,” he said.

The reason for excluding the trustees from the system, he said, related to the compliance or non-compliance history and behaviour of the trustees.

“So you find examples where some trustees have withdrawn money from the fund, sort to disguise those withdrawals as loans or concealed their actions by simply not lodging returns,” he said.

“Sometimes unfortunately people have things like gambling habits and so they’ll roll money from an employer fund into an SMSF so that they can start accessing inappropriately to fund gambling debts and that.”

Read more:

AMP reports growth for SMSF arm

Practitioners warned on traps with active asset reductions

NSW woman charged following SMSF dealings

Add comment


Security code
Refresh

Comments   

 
0 #2 Ian 2016-02-20 12:28
When Mr Jordon makes a choice to do 'low cost' audits of taxpayers he sees this as a prudent administrative election. But when a similar decision is made by SMSF taxpayers, he wants to increase the cost of compliance for no material reason.
The problem is that the ATO does not have the resources that it needs to manage the SMSF risk now. Instead of seeking more funds from government, it is now seeking to shift the cost to users.
A much better approach would to seek to help trustees manage their duties prior to making illegal mistakes. There are currently too few online tools provided by the ATO for normal trustees to navigate this area of complex law. But instead Mr Jordan has put his resources into chasing villains after the facts.
Quote
 
 
0 #1 kca 2016-02-19 12:24
Does anyone know whether the 2,200 new SMSF applicants ATO audited were chosen for a reason or was randomly selected. If it was random then ATO is saying about 15% completely unable to run a fund and 40% overall either unable or needing to be restricted in some way even with assistance from a planner or accountant.
If nothing special about this sample it could be extrapolated ATO thinks 40% of SMSF trustees can't run their own fund with full discretion. That seems very improbable.
Quote
 

Straw Poll

Has the budget affected your ability to advise your clients on super
  • Votes: (0%)
  • Votes: (0%)
Total Votes:
First Vote:
Last Vote:

Latest Columns

Latest Comments