The move by the Turnbull Government to change the annual audit cycle for some self-managed superannuation funds to three years has been welcomed by the SMSF Association.
Minister for Revenue and Financial Services Kelly O'Dwyer said the reform, announced in this year's Budget, will cut the red tape and burden for SMSFs that have a history of good record keeping and compliance.
Currently, SMSFs must be audited annually by an independent SMSF auditor who is registered with ASIC and audits documents prepared prior to submitting an SMSF annual return (SAR).
The ATO generally requires SARs to be submitted by May of the following financial year; it estimated that approximately 25% of SARs received in 2015-16 were submitted late.
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"We have listened to initial stakeholder feedback on the Budget announcement and welcome further feedback to ensure this change is appropriately targeted and implemented," O'Dwyer said. Stakeholders can provide feedback on the consultation until 31 August 2018.
The Government has recently proposed other changes for the SMSF sector, including expanding the limit on the maximum number of SMSF members from four to six, and extending SuperStream to include SMSF rollovers.
SMSF Association head of policy Jordan George said: "This eight-week consultation period will provide an excellent opportunity for the SMSF sector to provide Treasury with detailed feedback on this important policy shift."
George said among the key issues that need to be examined include the appropriate eligibility criteria for SMSFs to be included in the three-year audit cycle and what events will trigger an annual SMSF audit.
"Our audit members have also conveyed their strong concerns regarding the proposal's potential negative impact on the integrity of the SMSF sector, which is always of paramount concern to the Association, how it will affect audit workflows, and whether it will reduce costs for SMSFs. These are all important issues to work through during this consultation process," George said.