SMSF Auditors Professional Association Stakeholder Group Special Briefing 7 April 2020
Impacts of COVID-19
Self-managed super funds: Frequently asked questions (FAQs)
We recently published a series of self-managed super funds FAQs on the impacts of COVID-19 in response to feedback from the Stakeholder group.
We agreed to provide further updates to these FAQs. Since the meeting this action item has been completed, and the content has been updated to provide additional guidance on the following matters:
Guidance has been published on the following topics:
We also planned to provide further clarity around the issues through web guidance and news articles. Due to the impacts of COVID-19 we recently published specific to the 2019–20 and 2020–21 financial years:
We appreciate the difficulties faced by auditors given the lack of benchmarks for reporting in the current environment and will continue to work with them to resolve any issues.
Key to our compliance approach is that trustees are genuine in their claims for relief based on COVID-19. We only intend to apply compliance resources where that relief is abused.
Previously we advised that if trustees cannot meet their SMSF annual return lodgment obligations for example, because of a delay in obtaining the signed financial statements required to finalise the fund’s audit, they could also consider requesting a lodgment deferral.
To provide further support during this unprecedented time the ATO has applied an automatic deferral for the lodgment of the 2019 SMSF annual returns due on 15 May and 5 Jun 2020 until 30 June 2020 for all SMSFs.
Guidance on options for meeting the signature requirements is now contained in the FAQs.
ATO website/systems
The following issues were raised for consideration:
Reliance on FAQs
The FAQs relating to the impacts of COVID-19 are located separately to existing ATO web content, and guidance can be withdrawn or moved at any time, making it difficult to rely on that information. To help mitigate the concern, we agreed to consider how improvements to the ATO website could help us better manage links and updates.
Since the meeting this action item has been completed. All SMSF content on the ATO’s website that relates to COVID-19 will now show the date of publication or date of modification.
ACR reporting requirements
Due to the financial impacts of COVID-19, some SMSFs have had to provide rental relief to tenants or apply for loan repayment relief. In these situations, auditors will need to form an opinion as to whether the relief is on commercial or arm’s length terms in the current environment, and/or the arrangement gives rise to other contraventions under the super laws.
This has caused some uncertainty for auditors around the reporting of contraventions in the Auditor/Actuary Contravention report (ACR) and SMSF Independent auditor’s report (IAR).
Discussion points included:
- whether auditors should report contraventions in the ACR
- when auditors should qualify their opinion in the IAR
- establishing market values, including supporting documentation and valuations
- the potential need to amend primary documentation, that is, lease agreement
- documentation of COVID-19 specific relief
- market value reporting and subsequent event issues.
We agreed to provide guidance on some of the issues in the ACR instructions and/or another product, which stakeholders would have the opportunity to review before being published.
Since the meeting this action item has been completed. Due to the impacts of COVID-19, we recently published, specific to the 2019 20 and 2020 21 financial years:
These instructions provide guidance to auditors on how to determine whether a fund has complied with the super laws and when contraventions should be reported to us via the ACR. They also advise auditors whether they need to modify their opinion in Part B of the IAR
General guidance on these issues, and our compliance approach to actioning contraventions that have arisen due to COVID-19 specific relief, can be found at SMSF FAQs and COVID-19-relief-and-compliance-issues.
Other business
Update on self-managed super fund IAR for 2020
Changes have been made to the self-managed super fund IAR (NAT 11466), with effect for reporting periods starting on or after 1 July 2019. This form replaces the previous version of the IAR used for reporting periods on or after 1 July 2016.
An explanation of the changes and access to the new form is available.
Whilst auditors are required to use the new form for reporting periods starting on or after 1 July 2019, the ATO will accept that the approved form requirements are met, and will not take any compliance action, if the previous version is used in the first year.
Summary of key topics discussed at the SMSF Auditors Professional Association Stakeholder Group special COVID-19 briefing meeting 7 April 2020.