The number of random ATO checks of new SMSF registrations has been increasing. This means that new fund trustees should be more prepared than usual to receive a direct phone call from the ATO. The result of an unsatisfactory interview could see their fund registration rejected so some preparation is advisable.
What is the reason for commencing the fund? The sole purpose test requires that the fund be dedicated to providing retirement benefits. There can be other consequences such as:
- acquiring commercial real estate from related parties which retires bank debt
- providing related parties with a “permanent” business location (at market rates)
- saving tax, etc
but these cannot be the reason the SMSF is established so are not relevant to the question.
Who is managing the fund? All the trustees are managing the fund together with equal input. They may seek advice from external parties but the trustees are still jointly responsible.
What are the trustee’s responsibilities? Trustees should be familiar with the contents of the Trustee Declaration form.
It might be useful, if they need more time to prepare, for trustees to ask the ATO to phone back at a more opportune time. Also, though I am unaware of any activity in this regard, trustees should be sure that the call is actually from the ATO and not some scammer.
