The ATO’s “Hit List” for SMSFs this season

Every year the ATO puts out a Hit List for SMSFs. Knowing what is attracting the ATO’s attention is a great way to be pro-active and stay off the ATO’s radar.

The 2011-12 hit list has a very common theme – Tax Collection!

The Top 100 richest SMSFs

If your SMSF is rich, be prepared for greater scrutiny. If you have a wealthy SMSF, the ATO will be watching to make sure your fund is paying enough tax.

New SMSFs

Hints for new Trustees:

•      Make sure you’ve signed an ATO Trustee declaration within 21days
•      The fund doesn’t exist until it has assets, so open a bank account in the super funds name so you can make the initial contribution
•       Document a written investment strategy for the fund, and review it regularly
•       Always have enough cash in the super fund’s bank account to cover expected payments and cheques drawn as overdrafts are a no-no
•       If in doubt, get advice before you act
•      Never get involved in any Illegal early release schemes, they’re not worth it

Excess contributions tax (ECT)

The statistics on the number of people caught out by exceeding their contribution limits and being hit by huge tax bills are truly shocking. The ATO expects to issue over 70,000 assessments for excess contributions tax in 2011-12.

You can expect the ATO to come looking closely if you:

•       Re-report contributions after receiving an ECT assessment
•       Have your SMSF pay your ECT liability without completing and signing an ECT release authority

The best tip is make sure you get your contribution reporting right the first time. And if you go over your cap seek professional advice immediately as the extra tax can climb into 6 figures very easily.

Non-arms length income

If your SMSF receives non arms length income, it must be declared separately in your tax return and attracts tax at 46.5%. The ATO is on the lookout for undeclared “special income”. My tips are:

•       Do not distribute any income from a discretionary trust to your SMSF
•       If you rent commercial property to your business, get a rental valuation and pay a fair rate of rent preferably      monthly in advance.
•       If your SMSF is lending money, research the interest rate
•       Make sure private company dividends are reasonable

Exempt current Pension Income

When your SMSF is paying a pension(s), the income of the fund will either be partly or wholly tax free. The ATO is actively reviewing claims for exempt pension income and will deny the claim if you don’t get it right.

•       Get an actuarial certificate unless your fund has properly segregated pension assets
•       Invest in regular asset valuations
•       Physically pay your minimum pension payment in cash before 30 June
•       Don’t exceed your 10% maximum pension limit if you’re on a transition to retirement pension
•       Make sure documentation is in place to start your pension at the optimal time

Losses incurred by an SMSF

The rules have recently changed to prevent SMSFs treating shares as trading stock and deducting losses on their shares against income other than capital gains. If this affects you, double check your tax return, and utilize transitional rules for trading stock held before 10 May 2011 if possible.

Lodgement

Make sure you have your audit done and tax return lodged by the due date, laziness is a great way to attract attention!

Approved Auditors

SMSF Auditors are under the ATO’s spotlight, but how does this affect you? If your auditor is not doing the right thing and attracts the ATO’s attention, that can draw attention to your SMSF too.

What can you do?

      Pay attention to who your auditor is

      Make sure your auditor is independent and an SMSF audit specialist

     Work with your auditor to make sure they have enough information to come to the right audit opinion. The more      information you can provide your auditor the better.

As we all head off to spend precious time with our families over the Christmas holidays, I would like to wish all of our clients, friends, supporters and suppliers a wonderful Christmas and very Happy New Year!!

Matt and I have had an amazing 2011 and we thank you all for your ongoing support and friendship!

Opening Hours

As usual The Engage office remains open over the Christmas/New Year period, except for public holidays.

The Year that Was!

2011 has been a big year for Engage. It’s been loads of fun and a lot of hard work too. But we’ve loved every minute of it and look forward to 2012 with great excitement!

As we reflect on the “year that was”, we’d like to share with you some of our highlights of 2011:

An engaging new name! We changed our name to ENGAGE Super Audits incorporating a brand new website and a whole new Vision and Attitude!

New online client portal – We introduced a new online client portal to our website to increase the security and speed of transferring super fund files for audit. We are currently investing in major improvements to the portal which will mean a greater level of audit status communication to users in the very near future!

100% paperless office – Thanks to your co-operation and support of our efforts to move online, we have been able to achieve a pure paperless office which is great for the environment and means we can deliver audit reports faster anywhere in the country. Auditors are renowned for heavy reliance on paper and we’re very proud to have successfully bucked that trend.

CLASS Super preferred audit supplier – During the year we were recognized by CLASS as a preferred audit supplier, so you can now find us in their shopping cart.

New team members – We have welcomed a number of new auditors during the year, increasing our team of auditors to 10. They are a wonderful and very talented bunch and make our office an exciting place to be!

Faster turnaround – Average turnaround of audits in 2011 was under 7 days!

Relay for Life – Team Super Biz United competed in the 2011 Mingara Relay For life, raising $13,500 for the NSW cancer council. That makes $20,500 raised in two years for a cause very close to my heart.

Audit Fees – Our fee schedule has remained stable throughout the implementation of the new Clarity Standards for SMSF audits which was highly anticipated to have an inflation effect.

Partnering with NetActuary – Engage recently partnered with NetActuary to provide SMSF calculators through our website.These are great tools for any accountant or advisor operating in the SMSF space, so if you haven’t used them already, jump on our website and check them out.

Office move – The team moved from Gosford to Erina to provide us with greater room to move and grow, and improve the level of service provided to our valued clients.

The Auditor’s Blog was launched – Many clients are now using the auditor’s blog as a great resource for internal training as well as educating clients (especially with the series “Why does my auditor need that?!)

Webinars – We recently ran our first webinar in conjunction with Aaron Dunn and the SMSF Academy. There were over 100 attendees and the feedback was fantastic. So look out for more of these in 2012.

Supporting our industry – We have played a major role in supporting many local networking groups including SPAA Central Coast, ICAA Central Coast and the Central Coast Young CA Group for under 35’s.

Switzer Super report – Jo is now a regular contributor to Switzer Super Report www.switzersuperreport.com.au

We have welcomed many new clients on board this year and have thoroughly enjoyed getting to know you all! We look forward to working closely with you for many years to come. And of course we thank all of our clients for your continuing support and loyalty.

My Telstra journey

I have been on an amazing personal journey through the year thanks to the Telstra Business Women’s Awards program. For those of you who haven’t heard the news but may have followed me along the Telstra journey this year, I was ultimately named the Telstra Australian Young Business Woman of the Year.

I cannot tell you how much I have learnt and grown personally from this experience. It has been an amazing gift both for myself and all of my family, and an experience that I will never forget.

Really the Telstra process was not so much about the “award”, because awards can never be expected or assumed. What I was most grateful for was the journey itself and the amazing people I met and connected with along the way. Everyone has a story, and I enjoyed sharing mine with people outside my industry who knew very little about SMSF but still related to my message!

I had the chance to stand in front of over 600 guests (including Kevin Rudd!) and share with them my personal journey, my passion for the SMSF industry, and why I care so much about what we do here at Engage. See what I had to say here: http://www.youtube.com/watch?v=UTd5AUn71zA

Looking forward to 2012!

2012 is looking to be a very exciting year for the SMSF industry, and we have some major projects planned for the new year. To start, we are pleased to announce that ENGAGE Super Audits will be a sponsor of the 2012 National SPAA Conference in Sydney on 15 – 17 February 2012, we hope to see you there!

MERRY CHRISTMAS…..and see you in 2012!!

Jo Heighway x