By Anthony Cullen
If you are one of the few trustees who lodge your SMSF Annual Return (SAR) yourself, or you established your SMSF in the 2020 financial year and are using the services of a tax agent, your SAR is shortly due for lodgement. There are various lodgement dates for SARs each year, depending on your circumstances, but the one first year funds and self-lodgers need to be aware of is 28 February. Having said that, if a lodgement date falls on a weekend or public holiday, the final date for lodgement is pushed out to the next business day. As 28 February falls on a Sunday in 2021, the last date for lodgement becomes Monday 1 March 2021.
With only a handful of weeks to go, this date will come around quickly. Getting the tax return collated is one thing, but you also need to allow time for the financial accounts to be prepared, audited and signed off before the SAR can be lodged.
If you established your fund in the 2020 financial year and, for whatever reason, did not transfer any assets to the fund during the year, either via a rollover or contribution, you still need to be mindful of this date. An SMSF is a type of trust and is not legally established until the fund has assets set aside for the benefit of its members. Except for funds that have wound up in any given year, the ATO cannot accept an SAR that has no assets or member closing balances recorded.
This does not mean you can ignore the requirement to lodge a return and take no action. You’ll either need to have the fund’s registration cancelled or lodge a Return Not Necessary (RNN). Lodging a RNN is not as simple as telling the ATO you don’t need to lodge a return. You also need to confirm the fund had no assets and received no rollovers or contributions in its first year. Easier enough for some, but that’s not all. You’ll also need to provide evidence that the fund has since received a rollover or contribution and that there will be a requirement to lodge returns in the future. Otherwise you still run the risk of the having the fund’s registration cancelled. The RNN should also be lodged by the due date.
In December 2019 I wrote an article outlining some of the issues of lodging of your fund’s SAR after its due date by as little as two weeks. That article is still relevant and can be found here. Since writing that article we have seen further examples of funds being unable to participate in certain investments due to having their regulation status details removed from Super Fund Look Up. Highlighting the fact there can be a flow on effect of not lodging on time.
The other reason for referencing the earlier article is to highlight the potential issue for members of those 2020 first year funds that are still to arrange rollovers to the fund. If you haven’t arranged the first rollover that will ultimately establish the fund, doing so after March may prove difficult if your fund’s regulation status has been removed. It may become a catch-22 situation if you are unable to arrange the rollover you need to prove the fund’s existence. Perhaps you’ve established the fund but are still to arrange subsequent rollovers that will provide much needed capital to acquire assets within the SMSF. A late lodged returned or RNN could create unwanted issues.
Any action required should be attended to sooner rather than later. If lodging the SAR or RNN by the due date is going to be problematic, contact your tax agent or the ATO to discuss the possibility of an extension to lodge. This at least may ward off the prospect of having the fund’s regulation status removed and allow the fund to continue to receive rollovers and/or contributions or to continue to make all its intended investments.
Stay ahead of the game. Know the best strategies and how the latest regulatory changes affect your SMSF compliance. Sign up for SMSF news and insights from Australia’s top experts. A must for advisers and accountants.