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Anna Han Willetts

Jul 23, 2023

Incorrect rollover components in the receiving fund

in SMSF Technical Forum

Facts:

The new fund started Mar 2020
As of 30 Jun 2021, the fund's total member balance is $1531. Some contributions have made into SMSF during Jul 21 - May 2022

The trustee transferred $12,000 from SMSF bank into Australian Super in May 2022 without a Rollover Statement. Australian Super has shown $12,000 as member voluntary contribution.
Two members are 46 and 44 years old. Both member balances are 100% taxed.

The trustee has advised Australian Super to make correction on the $12K and wish to provid the relevant Rollover Statement. Australian Super responded that as the rollover has not been done via Super Stream, hence would not be accepted as rollover, so no correction need to be made.

Questions:

How to solve this puzzle?
If the issue remain unsolvable, would it be seen as the contravention and in breach of Sis 65 'The trustees must not loan monies or provide financial assistance to any member or relative at any time during the financial year'?

Thanks

1 comment

Comments (1)

THE AUDITORS INSTITUTE

Jul 23, 2023

Hi Anna

From an audit perspective on the basis that the Fund has not done the rollover via SuperStream (& I assume the trustees did not have the ATO approval to do a paper rollover statement) I would qualify the audit report in relation to SIS regulation 6.17 that requires:

“Payments of member benefits must be made in accordance with Part 6 or Part 7A of the regulations and be permitted by the trust deed”.

The ATO auditor compliance guidance states:

“It also includes obtaining evidence that the trustees have complied with the SuperStream rules in the SISR for rollovers to, and from, a SMSF from 1 October 2021. A failure to do so is a contravention of regulation 6.17.”

As auditor you would also need to:

1. Report the breach to the trustees in writing.

2. Issue an ACR (Auditor Contravention Report) to the ATO when re the breach (as per ACR instructions).

In the ACR I would advise the ATO that as a result of the the rollover not being done via SuperStream the receiving Fund has incorrectly recorded the rollover as a contribution.

I do not see it as a breach of section 65 of SIS but just a breach of SIS regulation 6.17.

Thanks

THE AUDITORS INSTITUTE