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ATO stops super guarantee payments when SMSF annual returns are overdue

The ATO has announced that self-managed superannuation fund (SMSF) members will not receive any superannuation guarantee (SG) payments when their annual return lodgement is overdue by more than two weeks.

Effective from 1 October 2019, this ruling is designed to protect retirement savings from risk, according to the ATO. When an SMSF is more than two weeks overdue on any annual return lodgment and hasn’t requested a lodgment deferral, the ATO will change the SMSF’s Super Fund Lookup (SFLU) status to ‘Regulation details removed’ and this status will remain until any overdue lodgments are brought up to date.

The new SFLU update process explained

On the first business day of every month, the ATO’s new two-step process for updating the SFL status of an SMSF works like this:

  1. Where an SMSF trustee hasn’t lodged their SMSF annual return on time and it’s more than two weeks overdue, the ATO will change the SMSF regulation status to ‘Regulation details removed’.
  2. Where all overdue lodgments have been received during the previous month, the ATO will reinstate the SMSF’s ‘Complying’ status on the SFLU.

What does a change of SFLU status mean?

When the SMSF has been given the status of ‘Regulation details removed’ it means that APRA funds won’t roll over any member benefits to the SMSF and employers won’t be able to make any super guarantee (SG) contribution payments for SMSF members.

The ATO is taking this approach because non-lodgment of SMSF annual returns is considered by the ATO to indicate a level of disengagement which could cause risk to retirement savings. The change in SMSF status on the SFLU and its consequences should more strongly encourage timely compliance with SMSF lodgment due dates.

How to avoid a change of SFLU status

The SMSF Accountant can ensure that client SMSFs are compliant but SMSF trustees for themselves can avoid their SMSF status changing to ‘Regulation details removed’ by lodging SMSF annual returns on or before the due date or otherwise, before the due date, seeking a deferral on lodgment from the ATO.

What SMSF members should do if SFLU status changes

If the SMSF status is changed to ‘Regulation details removed’, employed members should ask their employer to make any SG payments into the employer’s default super fund (or a fund of the member’s choice).

Once the ‘Complying’ SFLU status of the SMSF has been restored, members can request a rollover to their SMSF of any member benefits which may have been held outside their SMSF in the meantime. Even so, unwarranted inconvenience to the member and their employer is avoided if the SMSF is compliant with the ATO due date for annual return lodgment or a deferral of lodgment is sought before the due date.

How to get help with SMSF annual return lodgment

The SMSF Accountant is your personal SMSF accountant and here to help with ATO setup and administration. Talk to Diana Morris, The SMSF Accountant, about how you can enjoy the benefits of an SMSF without the time-consuming hassle of staying up-to-date with SMSF compliance issues.

 

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Diana Morris founded The SMSF Accountant in 2010. Diana is a member of the Institute of Chartered Accountants, holds a current public practice certificate, and is a registered tax agent. Diana has completed a Bachelor of Commerce degree and a Graduate Diploma of Chartered Accounting.