You’ve decided to take control over your retirement planning and savings and you’ve set up your own brand-new self managed super fund (SMSF). Now it’s October, and your first SMSF annual return (SAR) is due to be lodged by 31 October. Do you know what to do next?
Understanding your SAR obligations
You need to lodge your SAR every financial year, even if your SMSF doesn’t have a tax liability. The ATO considers this the most essential obligation an SMSF trustee must meet, as your SAR covers your SMSF’s income tax return, regulatory information and member contribution reporting, and payment of the SMSF supervisory levy.
First, make sure you understand what is required in order to lodge your first return. Each year, you must follow a specific process: prepare your SMSF’s accounts, including valuing your fund’s assets; appoint an approved SMSF auditor at least 45 days before your lodgment is due, ensuring the auditor has time to assess compliance and issue an independent report; address any issues identified by the auditor; and lodge your SAR and pay any outstanding tax and the supervisory levy. The supervisory levy is $518 for new SMSFs – this covers both your set-up year and the following financial year.
If you’re uncertain about your obligations or need help preparing your SMSF return, contact your registered tax agent as soon as possible. This gives them time to include you in their lodgment program, and will extend your lodgment deadline to 28 February of the following year. Remember to check your registration letter – some SMSFs may still need to lodge their return by 31 October even when using a tax agent.
Consequences of late lodgment
If you don’t lodge your SAR on time, your Super Fund Lookup status may change to “regulation details removed”. This means that your SMSF can be restricted from receiving rollovers and employer contributions, you could face penalties and you could lose your SMSF tax concessions.
Be aware that if you intend to lodge using a paper form, you could experience delays that might also result in your fund’s Lookup status being changed, as the ATO may take up to 50 days to process a paper return. So allow plenty of time for your SAR to be processed.
What if your SMSF has no assets yet?
An SMSF isn’t legally established until it has funds set aside for the benefit of its members. If your fund has no assets in its first year of registration, then you won’t need to lodge a SAR for that year.
Instead, you’ll need to either: let the ATO know in writing that you want to cancel your fund’s registration if you don’t want to go ahead with running an SMSF; or mark the SMSF’s record as “return not necessary” (RNN) by confirming in writing that your SMSF had no assets and didn’t receive contributions or rollovers in its first financial year; that you have evidence of the date your SMSF first held assets and started operating; and that you will be lodging future returns.
You can send the RNN request or cancellation to the ATO yourself, or if you’re using a tax agent, they can lodge it for you.
Where to get more help
The ATO’s interactive learning modules can help you understand your SMSF obligations and lodging your SAR. You can also check out the ATO’s “Your obligations as an SMSF trustee” or “Help and support for SMSFs” webpages. Your tax agent or financial adviser can help you navigate your obligations and lodge your first SAR.