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Frederick Walker

May 06, 2021

AFCA determination

in SMSF Technical Forum

I am auditing a new fund where monies have been received from an AFCA determination. The issues are that the client had a fund in 2017 where their accountant fraudulently stole some $300k. The existing fund was then closed.

The above client then sought redress via AFCA, where the determination was fond in favour of the client.

The above client has since opened up a new SMSF(?} and deposited the $300k as a non-concessional contribution based of the existing balances of the previous fund in 2017.

I would appreciate your comments on the above.

1 comment

Comments (1)

THE AUDITORS INSTITUTE

May 07, 2021

Hi Frederick

An ununsual situation that I have not come across before.

My queries as an auditor would be:

1) Do they meet the acceptance of contribution rules?

2) Have they breached the contribution cap rules?

3) Does the money received re the AFCA claim belong to the original Fund? (If yes what are the implications given the Fund has wound up?) (Is the $300,000 a rollover or a contribution to the new Fund?)

4) What are the tax implications of the money received re the AFCA claim?

5) What paperwork was provided by AFCA to support the money received?

Given the above you (or the trustees) may need to request the ATO or a lawyer to review the transactions to ensure that it has been correctly accounted for and treated.

Thanks

SMSF AAA