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  • Reporting criteria

    The following tests set out what contraventions you must report to us.

    Work through each test and, where applicable, report the sections and regulations listed in tables 1A and 1B.

    You are required to comply with prescribed auditing and assurance standards at all times.

    Test 1: Fund definition test

    Where the fund fails to meet the definition of an SMSF under section 17A, you can report this event in section E.

    Failing to meet the definition of an SMSF can result in a contravention of the SISA which may result in the fund losing its complying status. You should report this to us because, as the regulator of these funds, we may be able to assist the trustees in avoiding serious consequences if they want their fund to remain a complying SMSF.

    Go on to test 2.

    Test 2: New fund test

    As at the end of the financial year, if the SMSF is less than 15 months old and there are contraventions, you need to identify if any single contravention has exceeded $2,000. If this is the case you report all contraventions of the sections and regulations listed in tables 1A and 1B, regardless of the financial thresholds. You apply no further tests.

    If this is not the case, go to test 3.

    The 15 months is measured from the establishment date of the fund. A fund is generally established on the date it first holds any assets.

    Test 3: Trustee behaviour test

    You must report a contravention where the trustees have previously received advice of a contravention and after receiving this advice, they breached the same section or regulation, even if it does not meet the reporting threshold test. For example, you may establish that the trustees received advice of a contravention previously from reviewing the fund's prior-year working papers.

    Go to test 4.

    Test 4: Trustee behaviour test

    Where there is an event that contravenes a section or regulation only at the time it occurs (for example, a section 66 contravention), but it remains unrectified in the following years, it should continue to be reported under test 4. Even though the contravention does not actually occur in the following years, it should be reported under the section that was originally contravened.

    You may be able to check this from viewing prior-year audit documents.

    Go to test 5.

    Test 5: Trustee behaviour test

    Statutory time period refers to periods prescribed in the SISA and SISR.

    The reportable sections and regulations that have a statutory time period are listed in tables 1A and 1B.

    If the trustees fail to meet a statutory time period by more than 14 days, then these contraventions are reported as per the sections and regulations listed in tables 1A and 1B.

    Go to test 6.

    Test 6: Financial threshold test


    Where the value of all contraventions is more the 5% of the value of the fund's total assets, then contraventions are reported as per the sections and regulations in tables 1A and 1B.

    Any additional information needs to be reported in accordance with auditing and assurance standards and your professional judgement.

    If this does not apply, go to test 7.

    Example

    An SMSF has $250,000 in total assets, including an asset acquired through a related party for $25,000. This acquisition contravened section 66 because the asset was not one of the exceptions from the general prohibition on acquiring assets from a related party. The value of the contravention is 10% of the value of the fund’s total assets. The contravention must be reported because it is greater than 5% of the fund's total assets.

    End of example

    In relation to test 6, if section 83 in-house assets (prohibition on further acquisition) is contravened, then the contravention value is the amount over the statutory 5% limit. For example, if the market value ratio of a fund's in-house assets is 7%, then the contravention value is 2% of the fund's assets (7% minus 5% limit), so the contravention value is not greater than 5% of the value of the fund's total assets.

    Test 7: Financial threshold test

    If the value of all contraventions is more than $30,000 then these are reported as per the sections and regulations listed in tables 1A and 1B.

    Any additional information needs to be reported in accordance with the auditing and assurance standards and your professional judgement.

    Professional judgment

    In some situations a contravention may have occurred in the fund but you might be unable to determine the value of the contravention. For example, you may not have sufficient appropriate audit evidence to determine whether the assets of the fund have been valued at market value. This means a regulation 8.02B contravention may have occurred. In this case you may use your professional judgment to determine whether you think the value of the contravention could meet the financial threshold tests and where appropriate, report an event at Section E of the form. If you are unsure whether this would constitute a reportable contravention, you can provide this information at Section G.

    We also encourage you to report contraventions and other information that you think will help us perform our function as the regulator of SMSFs at Section G of the form. To decide if you should report contraventions and other important facts, even if they do not meet any of the tests, you should apply both of the following:

    • the auditing and assurance standards
    • your professional judgment.

    If you provide other information that you consider will help us perform our function as the regulator of SMSFs, you are consenting under paragraph 14ZZW(2)(e) of the Taxation Administration Act 1953 for the purposes of the tax whistle-blower legislation, to disclosing to the Commissioner, your identity (if required) when using this information in administering any taxation laws.

    If you would like to keep your identity confidential, you can make a disclosure by completing the tip-off form. The form is available on our website at ato.gov.au/tipoff. Alternatively you can find the form in the contact us section of the ATO App or you can phone in your tip-off on 1800 060 062.

    Last modified: 30 Jun 2019QC 17603