ATO crackdown on SMSF non-lodgers

The Australian Taxation Office (ATO) is cracking its whip on non-lodging self-managed super funds (SMSF), declaring them non-persons for tax purposes. 

The ATO will now treat the SMSFs that have two or more returns outstanding as a non-person by removing their entry from the Who’s Who of SMSFs, particularly Super Fund LookUp. 

One sector specialist is concerned about the serious impact this can have on SMSFs, especially their ability to receive contributions from employers, rollovers and transfers. 

While having details of the fund removed from the Super Fund Lookup website does not mean the super fund is not complying, it does mean it is much more difficult for outsiders to deal with that fund. 

“It does mean that other parties who want to deal with that super fund will probably not now deal with that super fund,” special counsel for Townsends Business and Corporate Lawyers Michael Hallinan said. 

“If that super fund wants to take up a borrowing, the bank will obviously do a search on the Super Fund Lookup website and find that its details have been removed and therefore that borrowing is not going to go ahead.” 

There is no legal recourse available to the non-person SMSF because the operation of the website is not a statutory function of the ATO.  

“There’s no act requiring the ATO to set and to establish and to maintain that website. That’s done as a courtesy to the super nation community,” Hallinan said.  

“There’s very little redress a fund that has been taken off will have [to ensure] its details are re-instated, unless you can convince the ATO that either the returns have been lodged or that there’s some error on the ATO’s part.” 

SMSF service provider Super Central warned the best thing to do is for funds to lodge overdue returns as soon as possible instead of legally challenging ATO’s treatment of the non-personage of the SMSF under the Administrative Decisions (Judicial Review) Act 1977.