The proposal to require self-managed superannuation fund (SMSF) financial statements to be prepared at least 45 days before the SMSF return lodgement day is due is unreasonable, according to the SMSF Association.
In a submission to Treasury Portfolio Laws 2020, the association said providing less time for SMSF trustees would deliver no tangible benefits and be disruptive. It recommended the measure was removed from the minor and technical amendments.
“We presume that this proposal therefore aims to ensure that SMSF auditors are given sufficient time to perform the audit before an SMSFs annual return is due,” it said.
“There may be some situations where an SMSF auditor is unable to complete the audit prior to the SMSFs due date because financials were received close to the SMSF annual return date. However, we do not believe this is a systemic issue for the industry.”
The association noted in the 2018 financial year, 90% of SMSFs lodged prior to their due date.
“Therefore, imparting a disruptive change that will affect many SMSFs and their current financial statement preparation processes to appease a small subset of poor behaviour is unreasonable,” it said.
“We believe the policy consequence of this proposal will simply be to bring forward the already legislated SMSF lodgement date for no apparent reason or benefit. Therefore, we do not support this measure.”
The SMSF Association also said the penalty for breaching the requirement was $2,200 and that this was substantially disproportionate to any breach of the offence. It pointed out that failure to meet the deadline might not be fault of the trustee and that breaching the 45-day rule would have no material impact on the SMSF audit of Australian Taxation Office lodgement deadlines.
It noted that the requirement might lead to a quality reduction of financial statements as some accountants and administrators might be inclined the rush the financial statements.
“This in turn will increase the audit fees by auditors who will have to provide more of a ‘review’ service on financial statements, which is not their core obligation,” it said.
“If an auditor finds errors in financial statements, these must be corrected by a trustee’s accountant or administrator and will increase the fees paid to them.”