Self-managed Superannuation Funds or SMSFs are personal funds where the members also play the role of trustees. Trustees of SMSFs decide how it will operate and where it will be invested. Other than that, it is also the trustees’ responsibility to remain compliant with all the superannuation regulations when contributing, investing, or paying benefits.
As compliance with rules is crucial for enjoying the benefits of being members of superannuation funds, the trustees/members must get SMSFs audited every year. The section below will help you understand the importance of SMSF audits.
Why Must You Audit SMSFs?
Every fund, irrespective of whether it’s small or large, must get audited annually. A third-party audit offers an independent view of the fund’s records and reveals whether they are flawless. You might not find the idea of getting these funds audited every year appealing. Still, you must hire a trusted company doing SMSF auditing Australia. That’s the only way to ensure that the funds in question comply with the country’s superannuation law and avoid paying unnecessary taxes.
The country’s superannuation law requires every SMSF trustee to employ an auditor, who will evaluate the fund’s activities during a given financial year and report on it. According to the law, the trustee must make an appointment with the auditor at least 45 days before the date on which the fund must lodge its annual return. Additionally, the trustee must provide all the information the auditor asks for within 14 days. Trustees may face penalties if they fail to submit information as per the auditor’s requests.
When hiring an auditor for auditing your SMSF you must ensure that the person is registered. Additionally, you must also check whether he/she undertakes professional development, complies with auditor independence clauses and has professional indemnity. The easiest way to find an auditor meeting these criteria is by contacting a top company offering accounting service Sydney and other Australian cities.
The Potential Dangers of Leaving SMSFs Unaudited
Are you thinking of disobeying the government’s mandate of auditing your SMSF hoping that your small fund doesn’t require so much effort? If yes, you are about to commit the biggest mistake of your life.
SMSFS must lodge their respective annual returns every year. These include both a tax and regulatory return. Additionally, the tax department also needs the trustees to submit detailed information on contributions made by members and the balance they hold in the fund at the end of the financial year. If the trustee fails to provide these details along with the details of the auditor, the Australian Tax Office (ATO) will reject his/her return (for the fund).
Another serious consequence of failing to lodge the fund return correctly is the removal of regulation information from the tax department’s Super Fund Lookup. Trustees may even get disqualified and the ATO may impose massive penalties.
Final Words
If you want to make the most of your SMSF investments, you must ensure that the funds get audited annually. It shouldn’t be difficult to find qualified business accountants Sydney and other Australian cities who are also registered auditors. An experienced auditor will help you avoid discrepancies, omissions and errors and enjoy the benefits of investing in SMSFs while staying legally compliant.
