SMSF auditor obligations
The ATO recently extended their transitional compliance approach set out in Practical Compliance Guideline PCG 2020/5 Applying the non-arm’s length income provisions to ‘non-arm’s length expenditure’ – ATO compliance approach for complying superannuation entities to cover the 2021-22 income year.
The PCG now applies to the 2018-19 to 2021-22 income years.
The extension has been provided while the ATO finalises Draft Law Companion Ruling LCR 2019/D3 Non-arm’s length income – expenditure incurred under a non-arm’s length arrangement.
As outlined in PCG 2020/5 the ATO will not allocate compliance resources to determine whether the income of a complying super fund is non-arm’s length income (NALI) where the fund incurred non-arm’s length expenditure of a general nature that has a sufficient nexus to all ordinary and or statutory income derived by the fund.
As a result of the extension, auditors do not need to modify an opinion in Part A of the IAR for the income years where the ATO’s transitional compliance approach in PCG 2020/5 applies.
However, auditors will still need to consider modifying an opinion in Part A of the IAR where the fund incurred non-arm’s length expenditure that directly related to the fund deriving particular ordinary or statutory income as the compliance approach in PCG 2020/5 does not apply.
We will let you know when the ATO has finalised the content of draft LCR 2019/D3 and what it means.
Call the team at Queensland Audit Services on 1300 880 130 in Dalby, Toowoomba or Chinchilla if you have any queries about SMSF auditor independence or to discuss the audit of your self-managed super fund.
