Reporting criteria

The following tests set out what contraventions you must report to us:

• Test 1: Fund definition test
• Test 2: New fund test
• Test 3: Trustee behaviour test
• Test 4: Trustee behaviour test
• Test 5: Trustee behaviour test
• Test 6: Financial threshold test
• Test 7: Financial threshold test
• Professional judgment

Work through each test and, where applicable, report the sections and regulations listed in tables 1A and 1B. For the 2019–20, 2020–21 and 2021–22 financial years, you also need to consider instructions in the Addendum for financial years impacted by COVID-19. These instructions relate to rental, loan repayment and in-house asset relief, market valuations and early release of super due to COVID-19.

You must always comply with prescribed auditing and assurance standards.

You must report contraventions that meet the reporting criteria. You can also report contraventions that do not meet the reporting criteria if, in your professional judgment, the regulator should be aware of the contravention.

Test 1: Fund definition test

Where the fund fails to meet the definition of an SMSF under section 17A of the SISA, you can report this event in Section E.

Failing to meet the definition of an SMSF can result in a contravention of the SISA which may result in the fund losing its complying status. You should report this to us because, as the regulator of these funds, we may be able to assist the trustees in avoiding serious consequences if they want their fund to remain a complying SMSF.

Where you identify a contravention of section 126K of the SISA (disqualified persons not to be trustees or directors of corporate trustees), report this event in Section E.

You need to report this to us as contraventions of section 126K are serious. The removal of a trustee or director of a corporate trustee to rectify the contravention may impact on whether a fund meets the definition of an SMSF under section 17A of the SISA.

Go on to test 2.

Test 2: New fund test

As at the end of the financial year, if the SMSF is less than 15 months old and there are contraventions, you need to identify if any single contravention has exceeded $2,000. If this is the case, you report all contraventions of the sections and regulations listed in tables 1A and 1B, regardless of the financial thresholds. You apply no further tests.

If this is not the case, go to test 3.

The 15 months is measured from the establishment date of the fund. A fund is generally established on the date it first holds any assets.

Test 3: Trustee behaviour test

You must report a contravention of a section or regulation listed in tables 1A and 1B where the trustees have previously received advice of a contravention and after receiving this advice, they breached the same section or regulation, even if it does not meet the reporting threshold test. For example, you may establish that the trustees received advice of a contravention previously from reviewing the fund's prior year working papers.

Go to test 4.

Test 4: Trustee behaviour test

You must report a contravention of a section or regulation listed in tables 1A and 1B where an identified contravention from a previous financial year has not been rectified at the time of the current audit.

Where the event contravenes a section or regulation only at the time it occurs (for example, a section 66 contravention), but it remains unrectified in the following years, it should continue to be reported. Even though the contravention does not actually occur in the following years, it should be reported under the section that was originally contravened.

You may be able to check this from viewing prior-year audit documents.

Go to test 5.

Test 5: Trustee behaviour test

Statutory time period refers to periods prescribed in the SISA and SISR.

The reportable sections and regulations that have a statutory time period are listed in tables 1A and 1B.

If the trustees fail to meet a statutory time period by more than 14 days, then these contraventions are reported as per the sections and regulations listed in tables 1A and 1B.

Go to test 6.

Test 6: Financial threshold test

Where the value of all contraventions is more the 5% of the value of the fund's total assets, identified contraventions are reported as per the sections and regulations in tables 1A and 1B.

Any additional information needs to be reported in accordance with auditing and assurance standards and your professional judgment.

If this does not apply, go to test 7.

In relation to test 6, if section 83 in-house assets (prohibition on further acquisition) is contravened, then the contravention value is the amount over the statutory 5% limit.

For example, if the market value ratio of a fund's in-house assets is 7%, then the contravention value is 2% of the fund's assets (7% minus 5% limit). The contravention value is not greater than 5% of the value of the fund's total assets.

Test 7: Financial threshold test

If the value of all contraventions of a section or regulation listed in tables 1A and 1B is more than $30,000, all identified contraventions are reported.

Any additional information needs to be reported in accordance with the auditing and assurance standards and your professional judgment.

Professional judgment

In some situations, a contravention may have occurred in the fund, but you might be unable to determine the value of the contravention.

For example, you may not have sufficient appropriate audit evidence to determine whether the assets of the fund have been valued at market value. This means a regulation 8.02B contravention may have occurred. In this case you may use your professional judgment to determine whether you think the value of the contravention could meet the financial threshold tests and where appropriate, report an event at Section E of the form. If you are unsure whether this would constitute a reportable contravention, you can provide this information at Section G.

We also encourage you to report contraventions and other information that you think will help us perform our function as the regulator of SMSFs at Section G of the form. To decide if you should report contraventions and other important facts, even if they do not meet any of the tests, apply both:

• the auditing and assurance standards
• your professional judgment.

Before you complete this section, consider if you consent (under paragraph 14ZZW(2)(e) of the Taxation Administration Act 1953 for the purposes of the tax whistleblower legislation), to disclosing to the Commissioner of Taxation your identity (if required) when using this information in administering any taxation laws.

To keep your identity confidential, make a disclosure by completing the tip-off form. Alternatively, find the form in the Contact us section of the ATO app or phone in your tip-off on 1800 060 062.