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Shalendra Pillay

Sep 03, 2022

Pension

in SMSF Technical Forum

I received Audit for 30 June 2022 and following issues noted:

Member 1 in pension phase for the last 5 years.

Member 2 not preservation age until 01/01/2023. Member 2 not working and member balance for 30 June 2021, $2.40m. Member took out $10%, $240,000 as transition to retirement payments in 30 June 2022. The Accountant informed the member and the member paid this back to SMSF after 30 June 2022. Accountant has treated this as loan to member in the financials.

Do I need to lodge a contravention report only?

1 answer0 replies

Comments (1)

THE AUDITORS INSTITUTE

Sep 04, 2022

Hi Shalendra

Yes if the $240,000 is a loan to a member this is a breach of section 65 of SIS that requires a Fund to not be able to lend money / provide financial assistance to a member.

As the breach is greater than $30,000 you would have to lodge an audit contravention report (ACR) and qualify part B of your audit report and report the breach to the trustees.

The trustees are also arguably in breach of regulation 5.08 and 6.17 of SIS in that minimum benefits have not been maintained and the benefit payment rules have not been complied with. I would consider raising this in the audit report and the ACR as well.

Thanks

SMSF AAA