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Is there any issues for an auditor to sign off audit report for a super fund that was setup over a year ago but has not received any rollover or super contributions.
I am not aware even if the bank has opened yet.
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Not an issue as long as the trust deed has been prpoerly prepared and tax return appropriaately lodged by due date
can it be argued that the members have made contributions when the members paid for the establishment cost of the SMSF, as in deemed contributions? The members can be reimbursed by the fund once rollover comes in. SMSF takes up the formation expense and sundry creditor, will that work?
As explained to me some time ago (shortly after the ATO seemingly began rejecting RNN's). As an SMSF is essentially a trust, it needs to hold some something in trust. The ATO advise not to apply for an ABN to avoid the RNN issue. However, this is not practical as ABN's are usually applied for at establishment. To overcome no contribution/rollover, the ATO's position (as advised to us in the past ) is that a non concessional contribution of (at least) $1.00 is made in cash and held by the trustee. Therefore, a contribution has been received and the SMSF now has trust Property. The $1.00 is recorded as cash on hand in the accounts of the SMSF. When the bank account is opened, the $1.00 can then be banked. This would give rise to both a auditable financials and the requirement of a tax return.
Clients tare reporting it is taking 4 months to process these RNN's! Apparently a difficult process for the ATO, an accountant I know has suggested they do a return with like $1 as other income/NCC and a debtor and lodge a nil return in essence. If I was to audit this I would like to see a bank statement there is now activity. This seems out of desperation as they are finding they can't roll funds over before 30/06/2023 or make SGC because it is showing up as non complying and the RNN is not going to be processed in a reasonable time frame. Would you see this as a problem as an auditor if this comes across our desk?
Hi Dawood
If a Fund has no transactions in its first year it can apply to the ATO for an annual return to not be required. For that year my view is that an audit report is not required.
The tax agent of the Fund can apply for that through the tax agent portal.
Refer from the ATO below.
The ATO states:
"Our systems will not accept an annual return for an SMSF that has no assets or no closing member account balances, unless the return is for the year in which the fund is wound up."
Thanks
SMSF AAA
From:
https://www.ato.gov.au/super/self-managed-super-funds/administering-and-reporting/lodge-smsf-annual-returns/
Funds without assets
An SMSF is not legally established until the fund has assets set aside for the benefit of members. Our systems will not accept an annual return for an SMSF that has no assets or no closing member account balances, unless the return is for the year in which the fund is wound up.
If an SMSF does not have assets set aside for the benefit of members in the first year it was registered, you can ask us to either:
cancel the fund's registration
flag the SMSF's record as return not necessary (RNN) if the SMSF confirms in writing
that although registered, it had no assets and did not receive contributions or rollovers in the first financial year
that it has documentary evidence of the date the SMSF first held assets and commenced operating (for example the SMSF's first bank statement)
that it will be lodging future returns.
If you're a trustee your written request must include:
the SMSF's name, TFN or ABN
confirmation that it meets all eligibility conditions
documentary evidence of the date assets were first placed into the fund.
This request can be sent to us at:
Australian Taxation Office
GPO Box 9990
[insert the name and postcode of your capital city]
For example
Australian Taxation Office
GPO Box 9990
SYDNEY NSW 2001
If you're a tax agent you'll need to use the Online services for agents mail option, select Superannuation as the topic, and choose from the following mail subjects:
SMSF cancellation of registration – where a fund has not legally established
SMSF new registrant – Return Not Necessary request.
For RNN requests your submission must include:
the SMSF's name, TFN or ABN
confirmation that it meets all eligibility conditions
documentary evidence of the date assets were first placed into the fund.
An RNN is generally only allowed for a newly-registered SMSF in its first year of registration.
RNNs for subsequent years will only be granted in limited circumstances and where the fund provides documentary evidence of the date assets were first held by the fund, for example the SMSF's first bank statement.
When an SMSF that has previously advised a return was not necessary is legally established and needs to lodge a return for the first time, the due date of the first return lodged by a tax agent will be 28 February.