by Neale Prior
The Australian Tax Office has vowed to step up its investigative and intelligence efforts because of fears that $496 billion-plus self managed superannuation funds were being eyed by fraudsters.
The tax office said the growing amount of retirement savings being investigated through the nationals 503,000 of SMSF’s was making the funds a target for fraudulent schemes, including ones that had a veneer of professionalism while touting unrealistic returns.
Tax office compliance chief Bruce Quigley said his agency planned to strengthen its intelligence efforts with the Australian Crime Commission, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission. Mr. Quigley disclosed the anti fraud campaign in an outline of 2013-14 plans. These included over seeing compliance in collecting tax, monitoring super contributions, reuniting people with their lost super accounts and regulating DIY funds.
The regulator reviewed more than 9000 SMSF funds in 2012-13 and it plans to crank this up to more than 16,000 this financial year. This will include 1100 checks that these funds are complying with their income tax obligations and 15,100 checks on compliance with super regulations. It is planning to probe 160 SMSF auditors.
Despite widespread concern about the regulatory burden of running a SMSG, the tax office reported that less than 2 per cent of funds breached their obligations. During 2012-13, it ruled that 130 funds were not complying with SMSF rules because of serious breaches and it removed 434 funds it found suspect.
If a fund is found to be non compliant, it losses its concessional tax treatment and can be exposed to tax at rates of 45% or higher.
Mr Quigley said his agency would continue to focus on SMSFs that continued to breach their obligations by making investments ineligible investments, flouting related party transaction rules on making and prohibited loans.
SMSF Professionals Association of Australia’s technical chief Jordan George said it was crucial that trustees knew they would be facing more scrutiny this year.
“in this environment, SMSF trustees need to ask themselves, are they getting the best possible advice, and if they aren’t, is it worth risking their funds complying status,” Mr. George said. “being made non-complying can severely damage trustees’ retirement plans”