The Australian Tax Office (ATO) has made a number of key changes to the Self-managed superannuation fund 2019 annual return to facilitate the superannuation reforms that came into effect on 1 July 2018. The four changes across 3 sections of the return are highlighted below. For further detail on what this may mean for you, we recommend visiting the ATO’s guidance on the new labels here.
1. Section A-6 SMSF auditor label B – Part A Qualification
|Label B - Was Part A of the audit report qualified?||Part A of the audit report has risen in importance in recent years due to the introduction of the Transfer Balance Cap and the need to monitor how a fund is able to claim Exempt Current Pension Income.
Historically, Part A qualification (referring to whether the financial statements of the SMSF represents a fair financial position of the fund) was not required to be reported, only Part B qualifications relating to fund compliance with the SIS Act and regulations. Now ‘Yes’ must be answered if the audit report was qualified at Part A and/or Part B, regardless of the auditor's reasons for the qualification.
In prior years ATO advised you could answer 'No' if the only reason the auditor qualified Part A was because they could not confirm the information provided to them (for example, opening account balances). This is no longer the case and the audit opinion must now be conveyed correctly for 2019.
This information is only one of the factors the ATO will take into account in making a risk assessment of the fund. The ATO would not generally raise an audit or review based solely on a qualification of Part A.
2. Section F – Downsizer contribution into superannuation and Outstanding limited recourse borrowing arrangement amount (LRBA)
|Label H - Proceeds from primary residence disposal||From 1 July 2018, members who are 65 years or older and meet the eligibility requirements may choose to make a downsizer contribution into their superannuation of up to $300,000 from the sale proceeds of their home.
Amongst other eligibility requirements, downsizer contributions must be made within 90 days of receiving the proceeds of sale (usually by the date of settlement).
|Label Y - Outstanding limited recourse borrowing arrangement amount||A new label has been added to the Member sections of the 2019 SMSF annual return to report the outstanding LRBA amounts for each member.
Trustees must report the outstanding loan balances for all LRBAs, and not just those that would have been caught by the proposed changes for total superannuation balance purposes.
This information will be used for statistical purposes only. The reasonable method of calculating the Member’s outstanding LRBA is as follows:
“value of member’s supported super interests” means the sum of all the member’s superannuation interest that is supported by the assets that secure the borrowing.
“value of all supported super interests” means the sum of all superannuation interests in the fund that are supported by the assets that secure the borrowing.
3. Section H – Assets and liabilities
|Label 15c - Other investments |
|The term crypto-currency as described by the ATO is “a digital asset in which encryption techniques are used to regulate the generation of additional units and verify transactions on a blockchain”. 'Crypto-Currency' in the SMSF Annual return refers to Bitcoin, or other crypto or digital assets that have the same characteristics as Bitcoin.
A fund is now required to report the amount of any crypto-currency held in this label under section H – Assets & Liabilities.