All self-managed super funds (SMSFs) must lodge a SMSF annual return (NAT 71226) with us each year. The return combines income tax, regulatory and member information reporting obligations.
Lodgment of the annual return is required once a fund is established, which is only after assets have been set aside for the benefit of members. After that, regardless of whether or not the fund had any activity or assets during a financial year, a return is required each year until the fund is being wound up.
We have been advising funds that we expect SMSFs to have assets set aside for the benefit of their members. A SMSF is a trust and it must have assets set aside for the benefit of its members to legally exist.
From 1 July 2012, we have made systems changes to ensure that unless a SMSF has been wound up during the financial year, you will not be able to lodge a 2012 SMSF Annual Return through the electronic lodgment system (ELS) where the SMSF had either:
- no assets at the end of the financial year end
- no member balances at the end of the financial year.
In most instances, no assets or no member account balances indicate that the fund needs to be wound up or the return has been completed incorrectly and needs to be corrected to allow lodgment.
Zero Total Assets – you cannot lodge an SMSF annual return via ELS
From 1 July 2012, when attempting to lodge a 2012 SMSF Annual Return you will get an error message and will not be able to proceed with an ELS lodgment where:
- the balance for 'Total Australian and Overseas Assets' (Label U) is zero
- the answer to Section A Question 9 is 'no', indicating that the fund is not winding up.
This is because a SMSF is a trust and it must have assets set aside for the benefit of its members to legally exist.
There is a concession we have for newly registered SMSFs which have not commenced operating in their first financial year of registration. In certain circumstances, we may apply a RNN (return not necessary) concession to the fund for this first year.
Zero member account balances – you cannot lodge a SMSF annual return via ELS
In sections F and G of the SMSF annual return you are required to report all current members at 30 June of the relevant financial year and former members who were paid a benefit (that is, a lump sum or income stream, but not a rollover) during the income year. This includes members for whom no contributions were received.
Each closing balance should reflect the member's actual interest in the fund so that you can reconcile this against assets and other liabilities of the fund in section H.
From 1 July 2012, SMSF annual returns for the 2012 financial year showing a zero balance for total member closing account balances (Label W) will not be able to be lodged via ELS. You will receive an error message and will not be able to proceed with lodgment of the SAR.
There are only two exceptions. The first exception is if the SMSF is winding up and has answered 'yes' at Section A, Question 9 of the SMSF annual return. The second exception is if the SMSF has indicated at Section A, Question 8 of the SMSF annual return that the fund is a defined benefit fund.
What you need to do
You should review the SMSF annual return to ensure that assets and member account balances are accurately reported.
If you have determined that no further returns will be necessary for the SMSF, you need to consider the steps required to wind-up the fund.
If you continue to experience any difficulties with lodging returns via ELS, you should contact the Tax agents phone line, 13 72 86 Fast Key Code (FKC) 3 1 for assistance.
If you have any other questions, refer to the Super Funds website or phone us between 8.00am and 6.00pm, Monday to Friday, on 13 10 20 for specific information about your super reporting and lodgment obligations.
Alternatively write to us at:
Australian Taxation Office
PO Box 3100
PENRITH NSW 2740