Behind on your SMSF? Here’s what to do if you have overdue SMSF tax returns or other problems
If your SMSF has overdue tax returns, an outstanding audit, missing records or you have received a letter from the ATO, the worst thing you can do is ignore it.
We regularly speak to people who have put their SMSF problems in the too-hard basket because they don’t know where to start.
Sometimes an SMSF tax return is one or two years overdue. We regularly take on clients with 10 years outstanding.
Sometimes the previous accountant has stopped responding, the records have been lost or destroyed, or the auditor raised an issue and no one knows what to do.
And sometimes the trustee simply knows something isn’t right but is afraid to find out how bad it is.
The good news is that an SMSF problem can often be fixed.
The important thing is to deal with it rather than letting it get worse.
What happens if your SMSF tax return is overdue?
An SMSF must lodge an annual return with the Australian Taxation Office every year.
If your SMSF has one or more prior year annual returns outstanding at 30 June, a different lodgment deadline can apply. For example, the ATO’s 2026 lodgment program requires SMSFs with prior year returns outstanding at 30 June 2026 to lodge by 31 October 2026.
If your SMSF annual return is overdue, there can be more at stake than simply paying a late lodgment penalty.
The ATO can take compliance action against an SMSF that does not lodge its returns. This can include removing the fund’s complying status from Super Fund Lookup. That can prevent the fund from receiving rollovers and can affect employer contributions. This is especially important now PayDay Super has come into effect, as the employer may be subject to penalties.
If you have an SMSF with overdue lodgements, we start by working out exactly what is outstanding and why.
That means looking at:
- Which SMSF annual returns have not been lodged
- Whether the accounts and financial records are available
- Whether the SMSF has been audited
- Whether there are outstanding auditor issues
- Whether the ATO has contacted the trustees, and whether they are demanding immediate lodgement
- Whether penalties or other liabilities have been raised
- Whether the fund is showing as complying on Super Fund Lookup
- Whether there are any underlying SMSF compliance problems that need to be addressed
What if your previous SMSF accountant made a mistake?
This is another situation we see.
- You were given incorrect advice.
- Your accountant didn’t understand an SMSF issue.
- Tax returns were prepared but never lodged.
- An auditor raised an issue, but it was never resolved.
- Your accountant has simply stopped dealing with the SMSF.
We take over SMSFs in all these situations regularly.
Our job is to go through what has happened, identify what is outstanding and put a practical plan in place to get the SMSF back on track.
What if the ATO has contacted you?
Don’t put the letter in a drawer.
If the ATO has contacted you about your SMSF, the situation deserves attention.
The ATO has made it clear that persistent non-lodgment is an area of concern. It has used targeted compliance action against SMSFs with overdue returns, including removing complying status and, in serious cases, disqualifying trustees, fines and penalties.
If you have received an ATO letter, we recommend getting professional help before responding if you are unsure what it means or what you need to do.
What about SMSF penalties?
There are different types of penalties that can apply to an SMSF, depending on what has happened.
Late lodgment is one issue.
A breach of the superannuation rules is another.
For example, SMSF trustees can face administrative penalties for certain breaches of the Superannuation Industry (Supervision) Act.
These penalties can be personal penalties. They are not simply an expense that can be paid from your SMSF bank account.
The ATO also has other compliance powers, including education directions, rectification directions and trustee disqualification in appropriate circumstances.
There could be an underlying issue with the way the SMSF has operated.
For example:
- Money may have been taken out of the SMSF incorrectly
- The SMSF may have lent money to a member or related party
- An SMSF-owned property may have been used incorrectly
- A related-party transaction may not have been dealt with correctly
- The fund’s investment strategy may not reflect what it is actually doing
- Minimum pension payments may not have been made
- Records may be incomplete
- Assets may not be correctly recorded or valued
- The auditor may have reported a contravention
What information should you try to establish?
Try to find out what years are outstanding so that you have a rough idea when speaking to us. Also being to gather all the information you have.
Bank statements, investment statements, property records, loan documents, previous accounts, tax returns, audit reports and correspondence from the ATO can all help establish what has happened as well as the legal documents for the SMSF: Trust Deed, Trustee Declarations, membership applications and minutes.
We work with SMSFs that have problems
Our practice is different from many SMSF accounting firms:
- We work with people who come to us because their SMSF has become a problem.
- We start by getting a clear picture of the situation.
- We work out what is outstanding, identify any compliance issues and then put a plan in place to get the SMSF back on track.
You don’t need to be embarrassed because your SMSF has fallen behind.
And you don’t need to have everything sorted before you call us.
If your SMSF is behind, has overdue tax returns or you have an SMSF problem that you don’t know how to fix, talk to us.
The sooner you deal with it, the sooner you can stop worrying about it.
