The 15th of May is fast approaching meaning for SMSFs, it’s time to lodge your Annual Return.

So with less than 2 months to the deadline, now is the time to ensure your SMSF taxation and audit affairs are up-to-date.

What if you fail to lodge on time?

There are a number of penalties if you fail to lodge on time.

Failure to Lodge (FTL) Penalty

If you fail to lodge on time you will be subject to Failure to Lodge (FTL) Penalty (which is important o note is not a deductible expense).

FTL penalty is one penalty unit for each period of 28 days (or part thereof) that the Annual Return is overdue up to a maximum of 5 penalty units.

A penalty unit is currently worth $313 (on or after 1 July 2023). Hence a failure to lodge penalty could be anywhere up to $1,565 depending on how late your lodgement is.

Administrative Penalties

Individual trustees and directors of corporate trustees are personally liable to pay administrative penalties for failure to lodge.

Administrative penalties are levied on the trustees and cannot be paid from the SMSF.

They are also levied for each trustee so each individual trustee will be liable for the penalty amount. For a corporate trustee, there will be a single penalty.

Subsection 35B(1) of the SIS Act requires the trustee to prepare accounts and statements. Failure to comply can warrant an administrative penalty of 10 units equal to $3,130 per trustee.

Other Penalties

The ATO can enact further penalties for those who do not comply with superannuation laws depending on the severity of the breach.

Additional penalties can include a notice of non-compliance. This means for every year the SMSF is non-compliant, the assessable income is taxed at the highest marginal tax rate.

To avoid lodgement penalties, all SMSFs aim to meet lodgement obligations by the due date.

What happens when your SMSF lodgement is overdue?

If your lodgement of your Annual Return is overdue by more than 2 weeks, your compliance status will be changed to ‘Regulation Details Removed’.

When this occurs, the SMSF is unable to receive superannuation guarantee payments from employers and rollovers from other superannuation funds with any super guarantee payments need to be paid into an alternative super fund.

Once the SMSF Annual Return is lodged the status is updated to ‘Complying’ on the first business day of the following month.

For SMSFs that are lodging on time and complying will receive superannuation guarantee payments and rollovers; and qualify for a concessional tax rate of 15%.

So, with all that in mind, here are the important dates for your diary!

Important lodgment dates

31st October: Annual Returns where the trustee has been advised of the date, or one or more prior year Annual Returns were outstanding as at 30th June.

28th February: Annual Returns and payments where required for newly registered SMSFs – both taxable and non-taxable.

15th May: Annual Returns not required to be lodged earlier and also not eligible for the 5th June lodgement concession. Payment where required is also due.

5th June: Annual Returns for SMSFs that were non-taxable or received a refund for the last year lodged and are nontaxable or will receive a refund for the current year.

For assistance with your SMSF Annual Return, get in touch with us and make an appointment.