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Question is related to a failure to meet the minimum pension payment.
2021 audit for a fund with 2 members and a total member balance of $4M.
3 Pension Accounts for each member.
Minimum pension payments paid for each member for the 2 accounts.
Pension payments not made for the 3rd account. ECPI claimed for this account.
Pension payments for the 3rd account made subsequent to year end.
Accountant has reflected the amount unpaid as a creditor. (Total $11570 or $5785 for each member)
I agree that the audit report must be qualified.
The question is whether this is a reportable contravention.
Hi Pranlal
Re the audit contravention report (ACR) & whether to report you need to go through the reporting criteria as per the ATO as a starting point. It considers issues such as if it is a new fund or if it was a breach they had been advised of previously & you need to consider if it is a section / regulation of SIS that requires reporting on.
The ATO lists the sections or regulations that they want an ACR in relation to breaches. SIS regulation 1.06(9A) states that "pension payments must be made at least annually, and must be at least the amount calculated under Schedule 7".
This regulation however is not included in the ATO's ACR's list of sections and regulations to report on (via the ACR). That is the underpaid pension may not need to be reported in the ACR. The auditor could still use their professional judgement to report it to the ATO via the ACR.
It is a concern that the Fund has claimed ECPI for pension accounts that have been underpaid. Given the relatively small $ amount underpaid I query whether the pension payments could be re-allocated & if there is scope to fall under the underpayment by 1/12 rules.
Thanks
SMSF AAA