The Australian Taxation Office (ATO) has observed a high level of re-reporting of events covered under the Transfer Balance Account Reporting system and this concerns them as the amended reporting has resulted in 39% of the commutation authorities they have issued being revoked.
Due to this concern the ATO have released guidance for SMSF auditors outlining what they believe auditors should be checking as part of their audit of funds for the 2018 financial year where a fund has paid a pension.
The checks listed by the ATO are:
- that an appropriate condition of release was met
- that the pension is valued correctly in the financial statements
- the commencement date of the pension and any commutations have been properly documented
- exempt current pension income (ECPI) has been correctly calculated with respect to the pension and any commutations which occurred during the year have been considered
- the payments from the pension have actually been paid
- the minimum pension payment requirements have been met.
We are pleased to report that we check all of the above as part of our audit procedures and highlight that whilst our questions can on occasion seem excessive, we are asking to ensure your clients’ compliance obligations are in good order. You should therefore have confidence that where your SMSF clients are paying a pension, we have reviewed all necessary considerations.
You can access the ATO’s full news article on this issue here.
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