Friday, July 1Brisbane's Accounting & SMSF Specialists

Our Projects

  1. Bindi and Simon – SMSF settlement deposit problem solving
  2. Ursula and James – 4 Years SMSF Tax Returns and Audit Outstanding
  3. Scott and Jane – SMSF divorce settlement
  4. Samantha – 7 Years Individual Tax Returns outstanding.


1. Bindi and Simon – SMSF settlement deposit problem solving

Source-accounting-brisbane-CBD-SMSF-accountantBindi and Simon approached us to review a structure put in place by another Accountant in relation to their SMSF and borrowing. After a review of the documents, it became evident that the structure was not compliant with Superannuation Legislation. The SMSF had been established correctly. However, the Bare Trust establishment date, along with the date that the Bare Company Trustee was incorporated, was after a contract was signed to purchase a property. In addition, the name of the Super Fund appeared as the Buyer on the contract of sale.

Bindi and Simon had paid a deposit to purchase the property inside their SMSF. Thankfully, the settlement had not occurred. The Solicitor that Bindi and Simon had been referred to did not specialise in SMSF and had not picked up on these issues during the conveyancing process.

Due to the SIS Compliance risks that would have arisen from such a transaction, we recommended that Bindi and Simon seek third party legal advice and put the purchase on hold until the advice had been obtained. We put Bindi and Simon in touch with a Solicitor that was appropriately qualified and experienced to deal with SMSF property purchases. The Solicitor recommended that Bindi and Simon stop the purchase immediately and rescind the contract. They then arranged for the contract to be rescinded at no cost to Bindi and Simon. The deposit was repaid to the Fund. A new contract was drawn up, in the correct name and with the correct date.

These actions resolved the compliance issue that would have resulted in an Auditor Contravention Report and an ATO Audit. Had the transaction proceeded to settlement in its original state, the Fund Auditor would have qualified the Audit Report and lodged a contravention report in the year that the breach occurred. This would have then resulted in an ATO audit. In these cases, the ATO’s preference to rectify the breach would be to sell the property and potentially windup the Fund. They could also move to disqualify the Trustees and impose fines on the Trustees for each breach. The ATO fines can be up to $10,000 per Individual Trustee per breach. The fines are more for a Corporate Trustee. This would have cost Bindi and Simon a lot of money and time. A disqualification as Trustee also would mean that Bindi and Simon would never be able to act as a Director of a Company again.


2. Ursula and James – 4 Years SMSF Tax Returns and Audit Outstanding

Ursula and James were referred to Source Accounting by a fellow Accountant that does not specialise in SMSF. Ursula and James had established an SMSF based on advice received from a Financial Planner. They had a lot going on in their family over the last four years and as a result, had not arranged for the Annual Accounts to be prepared for the Fund and the Audit Conducted. Ursula and James had received a letter from the ATO advising them that they were required to lodge their overdue returns now or wind up their fund. We provided Ursula and James with a quote for these services and they appointed us to act as the Fund’s Tax Agent immediately.

Our first step was to contact the ATO and advise them that we had been appointed to act as the Fund’s Tax Agent. Ursula and James had kept records of the Fund’s investments however, there were gaps in the information that they had supplied. With the client’s authority, we approached the Banks and their Stock Broker to obtain the missing information. When we logged into the Share Registry with the Fund’s details, we found that there were many dividends owing to the Fund that went unpaid as the Share Registry did not have the Fund’s bank details on file. We arranged for the Fund’s bank details to be reported to the Share Registry which resulted in a large amount of dividends being recovered for the Fund.

We made this Fund a priority and all outstanding Financial Statements and Tax Returns were prepared within 7 days. We notified our Auditor of the urgency and our Auditor conducted the outstanding audits and finalised them within 7 days. All audit reports were signed off unqualified.


3. Scott and Jane – SMSF divorce settlement

Scott and Jane were referred to us from a Financial Planner within our professional network. Scott and Jane had divorced a few years ago and Jane had inherited the SMSF as part of the divorce settlement. Jane had never been involved in the day to day running of the SMSF and therefore, had no idea where to start. The SMSF tax return lodgements were 5 years late and Jane had suspected that she had not done something right with the management of the SMSF. The Fund was set up with Individual Trustees.

On close inspection we discovered that as Scott had thought that he was no longer involved in the Fund, he told Jane that she should close the SMSF bank account down and transfer the money from the SMSF to an account in her personal name. Jane had not met a condition of release. As a result, the Fund was in breach of the Super Law.
The ATO had issued a letter to the SMSF Trustees advising them that they should lodge immediately or will face penalties and possible windup of their SMSF with the Fund being deemed non-complying.

Jane had moved a few times in the last five years and could not locate the majority of her SMSF investment records.
We spent a considerable amount of time with Jane, contacting the share registries to obtain the holder identification numbers for her SMSF. Thankfully, Jane still had the SMSF’s money sitting in a bank account in her name. Jane immediately set up a new bank account for the SMSF and transferred her super balance back into the Fund’s bank account.

Unfortunately, Scott and Jane were not on speaking terms, however, as Individual Trustees of the Fund, they were both responsible for managing the Fund. At Source Accounting, we go above and beyond the call of duty, so we acted as the middle person to get the job done. The SMSF tax returns were all prepared, audited and lodged within 2 weeks. Due to the breaches that occurred, the Auditor lodged an Auditor Contravention Report. The Fund was then subjected to an ATO audit. Whilst the ATO found that breaches had occurred, as they were rectified immediately, the ATO concluded that the Fund could continue as a complying fund. The ATO issued penalty notices to each Trustee totalling $60,000 however, as we cooperated with the ATO and the matter was fully rectified and addressed within a quick timeframe, the ATO cancelled the penalties. Neither Trustee was disqualified. This is a great result for all parties involved.


4.Samantha – 7 Years Individual Tax Returns outstanding.

Samantha was referred to us from a friend that we had assisted with Individual Income Tax Returns. Samantha had not prepared her tax returns for 7 years and her income was in excess of the tax free threshold for each year. Her Centrelink payments had ceased as a result. We prepared Samantha’s outstanding tax returns during an appointment that took less than 1 hour. As a result, Samantha was entitled to a refund in excess of $48,000! Samantha’s returns were lodged and the ATO issued her refunds within 7 days. What a fabulous result!

If your SMSF tax returns are overdue, hiding is not the answer. Call us now and come clean! This is our speciality and dealing with breaches inside SMSF’s is our forte. Let us help you get back on track with your SMSF.

Disclaimer: Whilst the stories above are from real life circumstances, the names have been changed to protect the identity of our clients.