ATO Upholds Rigorous Standards for Tax Professionals Operating SMSFs: A Recent Case Study

The Australian Taxation Office (ATO) has once again asserted its dedication to maintaining stringent standards for tax professionals venturing into Self-Managed Super Funds (SMSF). This development follows an incident where a chartered accountant and approved SMSF auditor confronted a tax deficit nearing $180,000, resulting in the ATO amending tax assessments, imposing tax shortfall penalties, and disqualifying the trustee.

The Administrative Appeals Tribunal (AAT) endorsed the ATO's stance in the case WZWK versus Commissioner of Taxation AATA 872. The trustee involved, who was the solitary member of the SMSF, violated payment standards by unlawfully disbursing payments from the SMSF to himself, without satisfying a condition of release.

Consequently, the ATO revised the member's personal income tax assessments for 2015 and 2016 to incorporate these payments into their taxable income. This adjustment led to the tax professional incurring an extra tax of roughly $413,000 and tax shortfall penalties surpassing $179,000, attributable to deceptive and incorrect statements in their income tax returns.

Post-audit, the ATO recommended the trustee's disqualification as an approved SMSF auditor to the Australian Securities and Investments Commission (ASIC). The Tax Practitioners Board subsequently revoked their tax agent registration. The ATO declared, "We treat non-compliance seriously and persist in holding tax professionals to elevated standards concerning compliance with income tax and super laws in SMSF management."

This affirmation of rigorous standards for tax professionals managing their personal SMSFs follows the unveiling of the ATO's amnesty program for small businesses. The initiative invited businesses with pending income tax returns, fringe benefits tax returns, or Business Activity Statements (BAS) to submit them before December 31 to evade penalties linked with failure to lodge.

In conclusion, the ATO's recent measures underscore its dedication to enforcing high compliance standards among tax professionals involved in SMSF management. This is pivotal for preserving trust and integrity within the industry and safeguarding the financial interests of SMSF members.

Source: https://www.accountantsdaily.com.au/tax-compliance/18639-tax-professionals-to-be-held-to-higher-smsf-standards