ATO taking ‘harsher’ stance on loans to members

The ATO is paying closer attention to attempts by accountants to “patch up” mistakes by SMSF clients involving the removal of money from the fund.

 

Speaking at a recent Tax Institute conference, BDO partner, superannuation, Shirley Schaefer said sometimes where a member has taken money out of the fund where they weren’t meant to, SMSF professionals or trustees will say that it’s a loan to a member.

“It’s very convenient if someone has taken money out of the fund to say ‘it’s a loan to a member, we'll put a loan agreement in place to make it look a little bit more legit’,” explained Ms Schaefer to delegates at the Tax Institute National Conference.

While this will still be a contravention, it may not look quite as bad, she explained.

However, the ATO has now been taking a firmer view on this recently, she warned.

“The ATO are actually getting a bit more critical around this and saying ‘well hang on, if it’s true loan to a member, there should be a loan agreement in advance with commercial terms and appropriate repayment terms. If it’s illegal early access, we will treat it as illegal early access’,” she cautioned.

In these sorts of scenarios, Ms Schaefer said the loan agreement has probably been put in place after the event and there may or may not have been any repayments.

“These sorts of things give it away. So the ATO is starting to look through where we as accountants try to patch things up to make them look more legitimate,” she said.

“It’s certainly something the ATO is looking at a little bit more harshly.”

Ms Schaefer noted that it can be easy for SMSF trustees to mix up their personal and SMSF bank accounts, particularly if they’re all on the same app and accidentally withdraw money from the SMSF account by mistake.

“With some of these banking apps [all the accounts] are on the same one and you might click the wrong one by mistake, these things happen,” she said.

While small amounts of money aren’t material, said Ms Schaefer, they are still a breach and will likely be noted in the management letter.

 

 

Miranda Brownlee
21 September 2022
smsfadviser.com

More Articles

Why crypto treads an uncertain path through tax minefield

The taxation of digital assets used for lending and borrowing would benefit from clear-sighted...

Read full article

Wheat Production by Country

Check out the countries that produce the most...

Read full article

Labor tweaks stage 3 tax cuts to make room for ‘middle Australia’

Following years of mixed messaging, Labor has bowed to economic pressure and announced changes to its stage...

Read full article

Investment and economic outlook, January 2024

Region-by-region economic outlook and latest forecasts for investment returns. . What might shipping...

Read full article

Quarterly reporting regime means communication now paramount: expert

Communication between SMSF trustees, accountants and advisers is more crucial than ever with the quarterly...

Read full article

Four timeless principles for investing success

Investing success can mean different things to different people. Being clear on what success means for you is...

Read full article

Plan now to take advantage of 5-year carry forward rule: expert

This is the last year that the five-year catch-up contribution rules for concessional contributions can be...

Read full article

Super literacy low for cash-strapped

Financial literacy around superannuation is poor for many lower-income people, who still question why they...

Read full article

Sofie Korac is an Authorised Representative (No. 400164) of Prudentia Financial Planning Pty Ltd, AFSL 544118 and a member of the Association of Financial Advisers.

Financial Advice Sydney and the North Shore Office based in Gordon NSW

Financial Services Guide - Disclaimer & Privacy Policy

^