Australian Taxation Office (ATO) commissioner of taxation Michael D’Ascenzo yesterday said extra government funding had boosted its active enforcement capabilities to 590 personnel as well as its advisory services to self-managed superannuation funds (SMSF).
“We want to focus resources on those not doing the right thing. But this requires a differentiation between those doing the right thing and those doing the wrong thing and we do not have this completely licked,” D’Ascenzo said.
The ATO has regulated the superannuation industry since 1999. At this time there were 180,000 SMSFs compared to today’s 330,000.
“We are a new starter in the field of SMSFs,” D’Ascenzo said.
“Our approach has been to ensure people understand their rights and obligations. So our focus has been on support.”
Last financial year the ATO removed the complying status from 12 funds and this year it had removed the complying status of four, he said.
“This is not something we do lightly, it is a very serious step – it will mean that there has been a serious breach of the rules,” he said.
Nine trustees have been disqualified this year. There are currently 72 undertakings from trustees to rectify various breaches.
While the ATO is seemingly using its enforcement capability, D’Ascenzo said it was particularly keen to promote within the SMSF industry “good habits early on”.
He said currently 10 per cent of the 773,000 calls the ATO received were SMSF related and over 12 per cent of the 42,000 letters received by the regulator were SMSF related.
One of the ways to raise the compliance standards in the SMSF industry was through tighter auditing, he said.
Between July 1, 2004, and September 2006, the ATO received 10,000 contravention reports from over 9,000 auditors, he said. Of these reports, 16 per cent were due to assets not being in the name of the fund, while 14 per cent were due to the breach of the inside assets test.
“Adherence to a professional standard is a particular focus. Twenty-two high-risk auditors have been identified for audit so we’ll be knocking on the door and saying ‘hello, we’re here to help’,” he said.
