The ATO’s SMSF Early Engagement and Voluntary Disclosure Service

The ATO is asking SMSF trustees to engage with them directly, or via their SMSF Auditor, to address mistakes and be rewarded by a timely rectification of contraventions, possible less serious compliance enforcement outcomes, possible remission of administrative penalties and a possible reduction in income tax shortfall penalties.

In other words, there is a definite advantage in voluntarily disclosing errors as soon as they are identified as this may significantly reduce the costs associated with not doing so, and being found out.

For example, penalties may be reduced by 80% if trustees voluntarily disclose their errors to the ATO before their Fund is audited. They may still receive a 20% discount in penalties if they voluntarily disclose after the audit. These are meaningful rewards for admitting innocent mistakes. The trustees will benefit further as the error, which may be reported to the ATO by the Fund’s Auditor, will not result in any further action by the ATO if the contravention is resolved by the voluntary disclosure process.

How it will work

The trustees are encouraged to work with the Fund’s Auditor to rectify a known contravention. This may be reported to the ATO as a rectified contravention by the Auditor.

The ATO unlikely to take any further action.

If the contravention has not been rectified or voluntarily disclosed, the Auditor may be required to inform the ATO who will then review the matter which may result in the ATO auditing the Fund and applying penalties.

If, however, the contravention has not been rectified but the trustees have voluntarily disclosed the error and submitted a rectification proposal on the appropriate ATO form, the ATO will acknowledge the proposal and work with the Auditor and trustees to implement the proposal, reducing possible penalties accordingly. The ATO will generally not audit the Fund if the issue has been resolved via the voluntary disclosure process. 

Strong message

The ATO is sending a strong message encouraging all trustees to voluntarily disclose their errors directly to the ATO before their fund is audited or, after the audit, to disclose the error and work with the Auditor to ensure that the contravention is resolved.

Baumgartner Super will be pleased to discuss the voluntary disclosure service with you. Please contact us on 1300 04 7673 or via email info@baumgartnersuper.com.au 

Disclaimer: 

Please note that this article includes general advice only and is not specific financial product advice. Baumgartner Super and the Baumgartner Group will not be held liable for the consequences of any action taken or otherwise in relation to this article.