Early engagement and voluntary disclosure
The following examples explain the benefits of the Early engagement and voluntary disclosure service and are provided to assist self-managed super fund (SMSF) trustees in deciding whether they are eligible to use this service.
Example 1: Stephens superannuation fund
The Stephens Superannuation Fund bank account was overdrawn twice during the 2014–15 financial year. After rectifying the breach the trustee engaged an SMSF auditor and disclosed the breaches to ATO via the SMSF early engagement and voluntary disclosure process.
We advised the trustees that given the contraventions were rectified, there was no need for them to use the service and by raising the breaches with their approved auditor they had discharged their reporting obligations. The trustees also put controls in place to prevent the fund bank account being overdrawn in the future.
Given it was a reportable contravention the SMSF auditor lodged an auditor/actuary contravention report (ACR). As a result of the ACR, we sent an education letter to the fund in relation to the breach.
End of example
Example 2: Klein superannuation fund
The approved auditor for trustees Emma and Jonas Klein identified a Limited recourse borrowing arrangement (LRBA) breach in relation to the Klein Superannuation Fund for the 2014–15 financial year.
The breach arose because the Klein Superannuation Fund entered into an LRBA that had not been structured correctly. A holding trust did not hold the property on trust for the fund trustees and the LRBA was with a non-related party. The trustees made a voluntary disclosure of the breach and provided all relevant facts and supporting documentation. They also provided a proposed undertaking to rectify the contravention within six months.
The trustees actively engaged with us throughout the resolution process and lodged the outstanding returns. We accepted their undertaking to rectify the contravention. The terms of the enforceable undertaking were that the property was to be transferred into the holding trust within six months. SMSF administrative penalties were imposed and remitted in full given that the trustees made a voluntary disclosure.
End of example
These SMSF case studies are provided to assist SMSF trustees to decide whether they are eligible to use the SMSF early engagement and voluntary disclosure service.
Example 3: Okafor superannuation fund
The trustees made an SMSF voluntary disclosure that the Okafor Superannuation Fund had not lodged annual returns for four years because all its money was lost in an investment scam. The trustees made their disclosure prior to the notification of an ATO SMSF review or audit and provided all relevant facts and supporting documentation including bank statements. The trustees provided an undertaking to wind up the fund and not to act as trustees of another SMSF in the future.
The trustees actively engaged with us throughout the process and we verified the investment scam claims. We accepted the undertaking and the SMSF was wound up.
End of example