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Gulshan Ahuja

Sep 14, 2021

Fund ABN was cancelled but Tax Returns lodged and Liabilities were paid 4 years later

in SMSF Technical Forum

Fund’s ABN was canceled from 30/06/2014. Fund’s Bank Account closed on 13/07/2017 and balance transferred to another Fund as rollover. So There are 4 years of audits (i.e FY2014-15, FY2015-16, FY2016-17 and FY2017-18) which I have done recently and lodged contraventions due to one of the trustee directors being a disqualified person as GAOL. All the tax returns from 2014 onwards were lodged in 2021, but fund has no assets after 2017 because these were rolled over to other fund. During the audit of 4th year (FY2017-18), i see that all the Income tax and accounting fees paid by the member in 2022 has been taken as NCC in 2018 considering this as last year of the fund.

My understanding is that these payments by the member should be taken as NCC in 2022 year when these were actually paid and then we the fund should be wound up.

Please advise if i am right and what else should be kept in mind.

1 answer0 replies

Comments (1)

THE AUDITORS INSTITUTE

Sep 14, 2021

Hi Gulshan

I agree that if Fund expenses / tax was paid by a member in the 2021/22 year this would normally be treated as a contribution in the year that it was paid.

My view is if possible the aim should be from a practical perspective to wind up the Fund in the 2017/18 year (given the bank account was closed & the balance was rolled over in that year). To effect this then the tax / accounting fees paid in the 2021/22 would need to be treated as either sundry income or contributions in the 2017/18 year.

I would suggest that the tax agent contact the ATO via 13 10 20 or via the Tax Agent Portal and request that the ATO allow the Fund to be wound up in the 2017/18 year given the circumstances. From an auditor's perspective the approach re wind up (in the 2017/18 year) could be advised to the ATO via the audit contravention report using your "professional judgment".

The other issue to consider is if the ATO was to make the Fund non complying due to breaches of SIS (eg disqualified person acting as a trustee) then the Fund income could be taxed at the highest marginal tax rate.

Other member's may have differing views as to how to approach this issue so it would be good to hear these views.

Thanks

SMSF AAA