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Did I waste my time and $ having SMSF audited?

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Newbie

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Replies 2

My first step into the SMSF world was with Esuperfund which only allowed me to trade in shares.

 

I did this and turned a $45k super balance into $150k oddSmiley Very Happy

I was so happy, and thought the $$ could be lost as easy on the ASX casino so to omit temptation I bought a block of land overseas to lock in profit. This was back in 2015 (Fund contents one OS property and a few grand)

 

Esuperfund weren't impressed as this isn't in their super rules so they dropped my fund. Man Sad

I scrambled to find help but it got too hard so I put the idea in the bottom drawer, out of mind. In the meantime my employer contributions bounced as the fund became compliant so they established a standard government fund for my super to go into.

 

Recently I had FY2016, 2017 & 2018 return sorted and audited (property valued) resulting in a $10k+ tax bill (share sales) but not enough in the funds cash account to pay it.

 

Best way forward? 

As an honourable person, I'm trying to do it correctly....

i) I have done some research and it seems a Division 293 election form is the go.

I have sent in the ATO bpay slip along with a Division 293 election form in order to have the debt paid with one of my other super accounts. Is that the correct procedure? As Bruce4tax points out the other fund can't roll cash into my non-compliant SMSF.

ii) Should I just forget about the whole situation as it's still non-compliant and not much can be done about it.

 

Thanks in advance for taking the time to read my convoluted situation.

 

M

 

 

1 ACCEPTED SOLUTION

Accepted Solutions
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Most helpful response

Devotee Registered Tax Practitioner

Replies 1

my non-compliant SMSF.

 

But is it really non-complying?  The SMSF can only be non-complying if the ATO has issued a Notice of non-compliance because it does not comply with the Superannuation Industry (Supervision) Act 1993 regulatory provisions.

If you do not have such a notice, then the fund cannot be a non-complying fund.

 

On the other hand, if the fund was late lodging tax returns then ATO would have marked the fund as "compliance details withheld."

This should have been lifted after all the tax returns were lodged.

 

$10k+ tax bill (share sales) but not enough in the funds cash account to pay it.

 

But the fund still holds the land, so the fund is not insolvent  -  but is short of liquid funds.

It is one of the trustee's duties to ensure that the fund has sufficient liquid assets to meet liabilities, like tax, as they come due.

See investment strategy rules.

 

I have sent in the ATO bpay slip along with a Division 293 election form in order to have the debt paid with one of my other super accounts. Is that the correct procedure?

Only if you have a Div 293 debt to pay and you are requesting a release from super to pay that debt.

 

If my assumptions are correct, then you need to request ATO to update status to complying  -  then you can do a rollover.

 

I am surprised that your accountant is not giving you this advice.

 

 

If you cannot do a rollover, then the property may need to be sold.

 

 

2 REPLIES 2
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Most helpful response

Devotee Registered Tax Practitioner

Replies 1

my non-compliant SMSF.

 

But is it really non-complying?  The SMSF can only be non-complying if the ATO has issued a Notice of non-compliance because it does not comply with the Superannuation Industry (Supervision) Act 1993 regulatory provisions.

If you do not have such a notice, then the fund cannot be a non-complying fund.

 

On the other hand, if the fund was late lodging tax returns then ATO would have marked the fund as "compliance details withheld."

This should have been lifted after all the tax returns were lodged.

 

$10k+ tax bill (share sales) but not enough in the funds cash account to pay it.

 

But the fund still holds the land, so the fund is not insolvent  -  but is short of liquid funds.

It is one of the trustee's duties to ensure that the fund has sufficient liquid assets to meet liabilities, like tax, as they come due.

See investment strategy rules.

 

I have sent in the ATO bpay slip along with a Division 293 election form in order to have the debt paid with one of my other super accounts. Is that the correct procedure?

Only if you have a Div 293 debt to pay and you are requesting a release from super to pay that debt.

 

If my assumptions are correct, then you need to request ATO to update status to complying  -  then you can do a rollover.

 

I am surprised that your accountant is not giving you this advice.

 

 

If you cannot do a rollover, then the property may need to be sold.

 

 

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Newbie

Replies 0

Thank you again Bruce, 

 

my accountant is a bare bones thrifty one.

 

I will enquire now to the ATO and see if I can have the status altered. Couldn't bare to sell the property.