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The (New) Fund I am auditing (for 2021/22) paid their income tax liability one month late for 2020/21 (end of March 2022, instead of end of Feb 2022), and incurred ATO GIC ($200). I understand this may be considered a borrowing (but not not covered under an exemption in S67). Given that the Fund hadn't been operating for 15 months at the time of the late payment, does a contravention report need to be lodged? If so, what is the breach amount i.e., the value of the late paid tax, or the GIC interest amount, to determine if the Fund has exceeded the $2,000 threshold for reporting? Regards, Michael T
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Hi Michael
My view is that late paying tax and accruing a general interest charge would not be a borrowing so on that basis there is no breach of the borrowing provisions.
An old APRA Circular II.D.4. "Borrowing by superannuation entities" stated at paragraph 16 that:
"a borrowing involves receiving a payment from someone in the context of a lender / borrower relationship on the basis that it will be repaid. A transaction that gives rise to a debtor / creditor relationship does not necessarily give rise to a lender / borrower relationship and hence does not necessarily represent a borrowing for the purpose of the restriction."
Thanks
SMSF AAA