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I am currently auditing a fund for year 2022.
The fund has only one member and he decided to roll-over fund's assets into another complying fund owned by a family member.
He calculated the tax liability and prepaid it to ATO. He also prepaid accountant's fees and auditor's fees, assuming same charges as per prior year, and closed the fund's bank accounts.
He did not receive any notification from ATO that the fund has been wound up.
He did not use any SuperStream for the roll over, although he confirmed that he was an employee of the family business that made the contributions. The accountant claims that a number of attempts to access Australia Post for the SuperStream failed and other accountants/colleagues encountered the same issue.
What breaches/qualifications should be imposed upon the fund?
Hi WL
There is no requirement to advise the ATO that a SMSF is closing its bank account (that I am aware of).
The ATO would be advised of the wind up by lodging a final annual return that states that the Fund has been wound up.
My view is that there is a breach of Reg 6.17 of SIS re the rollover not being done via Super Stream assuming it was a rollover after 1 October 2021.
Assuming the rollover is a material amount then yes I would qualify Part B of the audit report & lodge an ACR re the breach of Reg 6.17.
If other members have a different view please let the forum know.
Thanks
SMSF AAA
Hi WL
It is mandatory for SMSFs to use SuperStream for rollovers to and from Funds from 1 October 2021.
The ATO announced temporary measure commencing from 16 March 2022 and that:
• “Using a paper form to conduct a rollover outside SuperStream on or after 1 October 2021 without first seeking our approval is a reportable breach of the SuperStream rules”.
• A SMSF trustee “can request to undertake the rollover outside SuperStream. We will confirm over the phone that you can use the paper process used for rollovers prior to 1 October 2021 and make a record of the approval”.
• An “auditor will not be required to report a contravention to us where you have received our approval to make the rollover outside SuperStream. This is a temporary measure put in place to help facilitate SMSF rollovers.”
The temporary relief “process is available only for rollovers from a SMSF and between SMSFs.” It is expected that the temporary relief will be removed shortly.
If not met the requirements noted above there is a breach of SIS regulation 6.17 in relation to the payment standards.
If the auditor is of the view that it is a material breach they would qualify part B of the audit report & also go through the steps to see if an auditor contravention report needs to be lodged. They should also raise the breach in their management letter to the trustees.
The auditor could lodge an ACR & explain the issues / problems noted re SuperStream. I would not expect the ATO to take any further action given that the Fund has wound up.
If other auditors have a view please let the forum know.
Thanks
SMSF AAA