In a parliamentary hearing last week, Senator Cory Bernardi raised an issue brought to his attention by an unnamed accounting firm that claimed that they and their clients were “interrogated” during the establishment of an SMSF.
According to Senator Bernardi, the firm alleged that their clients were interviewed individually for over an hour and were asked to provide “various types of documentation substantiating the structure which they intend to invest in and how they propose to do it”.
In response, ATO Deputy Commissioner James O’Halloran said that while the Tax Office ran a program reviewing the bona fides and the appropriateness of establishing an SMSF at registration, the case did sound unusual and irregular.
“Clearly I'm concerned, as you can appreciate, about the consciousness or the feeling, real or perceived, of an interrogation versus a review or an audit – and I don’t know which one it was,” said Mr O’Halloran.
“But, in short, we do have a process at the front door in terms of the establishment of self-managed super funds, and we do have programs particularly based on risk and some of the characteristics which we flag with industry very strongly.
According to the ATO, 2,600 new SMSFs underwent such a review during the last financial year.
“We are conscious of the right of people to establish a self-managed super fund, but it does create a concessionary environment and opportunities,” said Mr O’Halloran.
“Being a trustee and also an adviser to a self-managed super fund creates an obligation. The fact that ASIC have authorised, as you say, the financial advice – we’re not questioning that. But I also think, as regulator, that it’s appropriate for us, where we see risk, to sensibly try and follow it up.”
Stepping in, ATO Commissioner Chris Jordan told Senator Bernardi that the Tax Office would review its program to ensure it was “fit and proper”.
“I'm happy to undertake to you that we can revisit our program of these establishment queries because, just to reiterate, we don’t want people thinking this is somehow an inquisition of them,” said Mr Jordan.
“I don’t know the last time it was reviewed, but why don’t we undertake to you that we’ll have a look at the process to make sure it’s fit and proper. We certainly don’t want people to come away thinking that that was not a good experience at all.”