Updated: 2026
This article follows recent commentary by Naz Randeria in SMSF Adviser on the ATO’s 2026 SMSF annual return changes.
The ATO’s changes to the 2026 SMSF annual return may appear minor at first glance, but they are an important and practical step in strengthening audit transparency across the SMSF sector.
For the 2026 SMSF annual return, the auditor fee labels H1 and H2 in Section C are now mandatory. The ATO has also clarified that all modified opinions in the independent auditor’s report must be reported in the annual return, including qualified opinions, adverse opinions and disclaimers.
In our view, these changes are positive. They do not create a new audit obligation, but they make important audit information more visible and reduce the risk that audit outcomes are misunderstood or overlooked during the lodgement process.
Why mandatory audit fee reporting matters
An SMSF audit is not simply a data-entry exercise. A quality audit requires evidence, professional scepticism, judgement and clear documentation. That takes time, and time has a cost.
Not all SMSF audits carry the same level of risk or require the same level of work.
For example, one fund may hold only cash, listed shares and managed funds, with complete records, clear valuations and no compliance concerns. Another fund may hold commercial property leased to a related party, have an outdated lease, insufficient valuation evidence, missing trustee minutes and unresolved compliance issues.
Those two audits should not look the same. They do not involve the same risk, the same level of judgement or the same amount of follow-up work.
Mandatory reporting of audit fees at H1 and H2 gives the ATO greater visibility over what is being charged for SMSF audits. A low audit fee does not automatically mean a poor-quality audit. However, where a fund has valuation issues, related-party arrangements, missing records or a modified audit opinion, an unusually low fee may reasonably raise audit quality questions.
Modified opinions must be reflected correctly
The ATO’s clarification on modified audit opinions is also important.
If the independent auditor’s report is qualified, adverse or disclaimed, the SMSF annual return should not give the impression that the fund received a clean audit outcome.
This places a practical responsibility on all parties involved in the lodgment process. Auditors need to ensure their opinion is clear and properly supported. Tax agents and administrators need to read the audit report before lodging the SAR. Trustees need to understand that the audit report is not merely an annual formality.
Where a modified opinion has been issued, it must be considered carefully and reported correctly.
What this means for accountants, administrators and trustees
For accountants and administrators, the changes reinforce the importance of audit-ready files. Records should be complete, valuation evidence should be current and supportable, related-party transactions should be properly documented, and trustee minutes should be available where relevant.
For trustees, the message is also clear. The annual SMSF audit is a key governance process. It is designed to protect the integrity of the fund and support confidence in the SMSF sector.
For auditors, the changes are a reminder that audit quality must be visible in the file and defensible in the fee.
A positive step for the SMSF sector
The 2026 SAR changes are targeted, practical and consistent with the ATO’s broader focus on SMSF audit quality.
They should help improve consistency in audit fee reporting, ensure modified opinions are properly disclosed, and support better visibility across the sector.
Ultimately, this is a positive step for audit quality, regulatory oversight and confidence in the SMSF system.