SMSF registration: ATO may phone you - Don't be alarmed!

When you set up an SMSF, an application for an ABN, TFN and election for your new self managed super fund to be registered is completed online.  As part of the SMSF registration process before your fund is added to Super Fund Lookup, the ATO will review the application to ensure the application is legitimate and suitable.  This may involve the ATO contacting you to check details of the application or to interview you more closely to ensure you are not setting up the SMSF to gain illegal early access to your super.

Although the thought of the ATO calling you as part of the SMSF registration process may seem scary and intimidating, it’s quite rare and more likely to happen when specific ‘red flags’ are triggered by your application.

To be clear, I believe the upfront quality checks on new SMSF applications is a GOOD THING.  The more illegitimate or fraudulent SMSFs set up, the ‘cleaner’ and more reputable the overall SMSF space will be.

SMSF registration ATO phone interviews

The ATO will sometimes want to speak to a trustee / member of a new self managed super fund as part of the SMSF registration process.  The ATO has previously said this is because they want to ensure that you “demonstrate the knowledge and understanding required of a person acting in the role of an SMSF trustee”.

Many of the the questions they ask are based on the information contained in the ATO trustee declaration document all new SMSF trustees have to sign.  A copy of the trustee declaration can be found here: ATO Trustee Declaration Form.

Example questions

The following are some example questions the ATO might ask you as part of the SMSF registration process:

• When did you set up your SMSF?
• Who is your SMSF trustee?
• Who are the directors (of the corporate trustee)?
• Why did you set up the SMSF?
• Who set up the SMSF for you? What exactly did they do for you? How much did they charge?
• What is the purpose of a SMSF?
• What is the purpose of the SMSF trust deed?
• Did you set up a bank account? What name is the account in? Which bank? Who are the signatories on the account?
• How much are the rollovers from your existing superfunds?
• What do you plan to do with the rollover monies?
• How do you plan to contribute to the SMSF?
• What documents have you signed so far?
• What are your annual obligations?
• What are the annual SMSF fees for accounting, audit, and ATO levy ($259 or $518 in the first year)?
• Did someone tell you that you can access the money in the SMSF for personal purposes?
• When can you access the money in your SMSF?
• How does the ATO deal with non-compliance?
• What investments do you plan to make with your SMSF?

The answers to these questions can be found on both the Trustee Declaration as well as the ATO SMSF website content and informative websites like ours!

Delays in the SMSF registration process

Although most SMSFs are instantly issued with their ABN and TFN upon online application, it takes longer for the new SMSF to be listed on Super Fund Lookup. Until a newly set up SMSF has been registered and is showing as ‘Registered’ on Super Fund Lookup it cannot receive rollovers / transfer from other superannuation funds, receive contributions and in some cases not be able to set up a new bank or investment account (although this is more when the regulation details have been removed for reasons such as late lodgement of SMSF tax returns).

In addition to the above ATO interview, there are a number of other factors that may delay the SMSF registration process including:

• Incorrect associate details entered (names, addresses, TFNs, date of birth all should match the ATOs existing records);
• Personal or business tax and activity statements and not lodged;
• Outstanding / overdue personal or business tax debts;
• You’ve recently been made redundant, are receiving Centrelink benefits or have a very low superannuation balance;
• You’ve been a member / trustee of a previous SMSF which has had compliance action taken against it;
• You’ve accessed the COVID-19 early super release (this is OK by itself but may cause delays when combined with other factors);
• The on time lodgement record of the tax agent who has submitted the ABN registration (if tax agent details have been entered)

The above list is not exhaustive.  The ATO has a lot of powerful data available to determine whether your request to register an SMSF is legitimate and appropriate.

ATO information on registering your fund

The following is direct from the ATO website:

Two common errors in applications to register an SMSF and get an ABN are:

• the SMSF trust is not set up correctly before applying for an ABN, including setting aside an asset as the SMSF’s property
• the details of the members, trustees or directors of the corporate trustee are incorrect or incomplete.

To avoid common mistakes, read:

• Create the trust and trust deed – offers information about setting up a fund
• Associate details – outlines the information you’ll be asked for
• Eligibility to register and get an ABN
• What you need for your registration and ABN application

ATO SMSF registration delays

We do not automatically accept every registration application we receive. We will not accept your registration if we decide that:

• you have not completed the set up steps listed in Eligibility to register and get an ABN
• we cannot confirm the identity of all of the SMSF’s associates (trustees or directors of the corporate trustee)
• you or another trustee (or director) of the SMSF are not able to run an SMSF within the rules.

In many cases, the online registration and ABN application tool will check your answers as you enter them and will let you know that the SMSF cannot be registered (and an ABN cannot be provided) even before you submit the application.

In other cases where we cannot be sure of your eligibility based on your answers alone, we will withhold your registration while we investigate. You will be unable to transfer money from another super fund into your SMSF until we complete our investigation and register your SMSF.

For every SMSF applicant we consider all the trustees and other entities that they have controlled. We consider factors, including but not limited to:

• history of insolvency
• crimes related to dishonesty
• previous SMSF history
• personal lodgment and payment history
• super balance and income
• information about identities that have been used fraudulently.

If we have any concerns about your application we will withhold your registration and contact you to let you know that we are investigating your application. Most of these cases are resolved in under two months but it can take longer where a more extensive investigation is needed or the applicant trustees do not assist us fully.

Summary

It’s important to only set up an SMSF where its appropriate for your circumstances.  Advice from a licensed financial adviser should be sought and you should also undertake your own research into your obligation and responsibilities.  Operating an SMSF doesn’t have to be an administrative burden when you have appropriate support!

To learn more about the SMSF setup process, visit the following page: How to set up an SMSF