Running an SMSF means the compliance buck stops with you. None of the annual obligations are difficult on their own; what catches trustees out is that they are sequenced: records feed the accounts, the accounts feed the audit, and the audit must be complete before the return can be lodged. Miss an early step and everything downstream runs late.
The annual sequence
- Year-round: keep fund records, minutes and statements separate from personal finances
- After 30 June: prepare the fund’s financial statements and member balances
- Value assets at market value as at 30 June; property and unlisted assets need support
- Appoint an independent SMSF auditor at least 45 days before the return is due
- Lodge the SMSF annual return and pay the ATO supervisory levy once the audit is signed
The audit is not optional
Every SMSF must be audited every year by an ASIC-registered SMSF auditor who is independent of the fund and of whoever prepared the accounts, even if nothing happened in the fund. The auditor checks both the financials and the fund’s compliance with super law, and must report certain contraventions directly to the ATO.
The investment strategy review
Trustees must have a written investment strategy and review it regularly; auditors expect evidence, usually a minuted annual review, plus reviews whenever circumstances change (a new member, a pension starting, a large asset purchase). It must also consider insurance for members, a step that is frequently missing.
What slipping costs
Late returns attract penalties and can change the fund’s compliance status displayed to employers and other funds. Serious or repeated breaches can lead to trustee penalties or, at the extreme, the fund being made non-complying, taxed at the top marginal rate on its assets. A boring, on-time compliance year is worth real money.