When setting up an SMSF, it’s best to have a tax accountant who’s a registered tax agent representing your Fund. The main reasons for this are acting as an intermediary between you and the ATO, offering extended lodgement deadlines for submitting annual returns to the ATO, and providing a guide to assist trustees with technical questions they may have in managing their SMSF in a compliant manner.
Advantages of using an SMSF Accountant
Compliance and Regulatory Obligations
An SMSF accountant helps make sure your SMSF is following the superannuation laws. An SMSF accountant assists with handling the tax and compliance aspects of your Self-Managed Super Fund (SMSF). With regulations changing frequently, an SMSF accountant will keep an eye on updates and changes in laws to ensure your Fund remains compliant.
SMSF Tax Returns and Financial Statements
An SMSF accountant helps prepare your annual tax returns and financial statements. They also assist with recording all income, expenses, and investments to help Trustees track the SMSF activity for the year under review. Supporting the Trustees through these procedures enables them to devote more time to making informed decisions about investments.
Ongoing Reporting and Record-Keeping
This is another key area where an SMSF accountant is beneficial for Trustees. They help keep your Fund’s records organised and up to date. Good record-keeping makes the annual reporting process easier and reduces the risk of error and compliance issues in your SMSF. Through this, Trustees can easily access their Fund’s records to stay informed and make confident decisions, knowing that everything is documented correctly. Remember, Trustees must keep records of the Fund activity during the year, and the accountant will represent these in the annual reporting pack.
ATO Audits and Annual Lodgements
Annual lodgements and the auditing process are both essential aspects of running an SMSF. An SMSF accountant will help Trustees in preparing and lodging yearly returns and preparing minutes, in addition to working closely with approved auditors who complete the annual audit process for your SMSF. If the ATO requests any additional information or clarification, an SMSF accountant can act on your behalf and guide you through the process of resolving any issues that may arise.
Why You Need an SMSF Accountant
Avoiding Costly Compliance Mistakes
Running an SMSF means your Fund must comply with superannuation laws. Without a guide, this may be difficult, as it involves following rules such as contribution caps, correct reporting, and avoiding misclassifying investments. Breaching these rules may result in penalties and could even lead to an ATO audit. An SMSF accountant helps prevent these situations by reviewing the transactions, investments, and record-keeping of your SMSF. They may also identify potential risks before they develop into significant issues. With an SMSF accountant, Trustees gain more freedom in making decisions with their retirement savings.
Staying Up to Date With SMSF Legislation
SMSF laws and regulations are changing frequently. Keeping up with these can be challenging for Trustees without any support. An SMSF accountant stays informed about legislative updates and interprets their meaning according to your Fund. They may assist you with the practical steps required to remain compliant and will also help with any necessary adjustments.
Strategic Support Without Crossing Advice Boundaries
An SMSF accountant will not provide you with personal financial advice, such as recommendations on what your Fund should invest in. Instead, they can give support to Trustees, which will help your Fund operate in a compliant manner.
The Risks of Managing an SMSF Without Professional Help
Superannuation rules are complex and change regularly, making it easy for a Trustee to become non-compliant without being aware. Trustees may struggle with issues related to contribution caps, incorrect recording of transactions, or breaches of related party rules. Breaching these can result in penalties, audits, and the Fund becoming non-compliant. Another challenge that Trustees face is record keeping, as SMSFs require accurate documentation to support annual reporting and audits. With poor record-keeping, there is a risk of inefficient tax reporting, which can lead to mistakes or misunderstandings that result in incorrect tax liabilities. Apart from compliance and tax issues, managing an SMSF without assistance can become overwhelming for Trustees, as they are focused on investment decisions while maintaining their Fund’s compliant status. An SMSF accountant reduces these risks by assisting your Fund in supporting the compliant status, keeping up with legislation changes, and assisting with the accounting and record keeping for your SMSF.
When an SMSF Accountant Becomes Essential
When an SMSF grows or becomes more complex, such as adding multiple Members, increasing investment diversity, or holding assets like property, which can be local or overseas, the Fund may require additional support. Events such as changes in Superannuation rules, Contributions, pension commencement or the death of a Member can increase compliance obligations. Without the help of an SMSF accountant, it can be easy for Trustees to miss essential reporting requirements or make mistakes during these activities. An SMSF accountant becomes essential in helping Trustees navigate the complex activities.
SuperStream
When selecting an SMSF accountant, make sure the accounting software they use is SuperStream compliant. This means you will be able to roll over existing superannuation balances into your SMSF, and it serves as the gateway allowing your employer to make contributions directly into the SMSF bank account. The software we use is called BGL360 and allows for contributions and rollovers to your SMSF.
How to pick the best SMSF Accountant for you
SMSF Experience and Qualifications to Look For
Choosing the right SMSF accountant can be challenging as you weigh the cost against the quality of service. A general rule of thumb is to ensure that the accountant you engage with is a licensed tax practitioner, a member of a professional accounting body like the Chartered Accountants Australia and New Zealand or CPA Australia, and that they have Professional Indemnity insurance in place. A telltale sign of a good SMSF accounting firm is whether they have experience with common SMSF investments and whether they specialise in niche SMSF investing.
Additionally, an accountant who liaises with the ATO and auditors on a regular basis is far better positioned to give guidance and identify or prevent any issues with your SMSF’s compliance than one who does not.
Questions to ask before you engage an SMSF Accountant
It is always best to conduct thorough research and ensure you are engaging with a reputable accountant. To see if the accountant is an excellent fit for you, you can ask them the following questions:
- How many Funds do you currently manage?
- Do you manage Funds with investments such as (name your investment)?
- Do you handle internal coordination with the auditor, or will I have to do that separately?
- Do you provide SMSF guidance or just accounting services?
- To complete the Annual Return, what documents do I need to provide?
These questions help gauge if the SMSF accountant is well-suited to your SMSF’s investment needs and if they have the experience to manage your SMSF’s accounting work properly.
Differences between an SMSF Accountant specialist and a General Accountant
An SMSF specialist accountant will be vastly different from a general accountant, as they will have extensive knowledge of SMSFs, be able to identify audit requirements, and pinpoint potential compliance risks. At the same time, a general accountant may not know the ins and outs of ATO regulations regarding SMSFs and may not be equipped to help you sort out any auditor contraventions. This is why it is essential to weigh the services a general accountant provides against those of an accountant who specialises in SMSFs, as a specialist provides the highest level of support and preventative measures.
Warning signs to look out for when choosing an SMSF Accountant
Sometimes it is hard to identify a good or bad SMSF accountant; however, some red flags to watch out for include an unclear fee structure, as hidden fees can add up significantly. Additionally, if they are late to respond, it may imply a lack of direct engagement and poor communication skills.
What onboarding an SMSF accountant should look like
First-year expectations for running an SMSF
The first year is typically the trickiest, but it does not have to be. Your SMSF accountant will guide you through the process, review your establishment documents, and ensure everything is compliant.
Your SMSF accountant should assist you with transferring your super benefits into your SMSF, liaising with the ATO in case any issues arise during the SMSF setup process, and addressing compliance risks associated with investments.
Once the initial establishment documentation, rollovers, and contributions are completed, you will only need to provide the necessary supporting documentation to complete the Annual Return each Financial Year.
How an SMSF accountant helps your SMSF stay compliant
A great SMSF Accountant does more than lodge your SMSF’s Tax Return at the end of the financial year. They should be able to identify any compliance risks with your investments and step in early to prevent any issues.
In the event a breach occurs, they can help guide you through the process of rectifying the breach. This is why choosing an SMSF accountant that liaises with the auditor is essential, as they can guide you through rectifying any non-compliant issues, ensuring your Fund’s ‘Complying’ status remains with the ATO.
Next Steps: How to be successful in running an SMSF
To get the best value from your SMSF accountant, you should be engaging with them regularly, and not only communicating with them at the year-end for your SMSF’s taxes. By sharing your decisions beforehand, especially for the most significant transactions, your Fund is more likely to remain compliant.
Keeping your end-of-year documents organised is also a great way to help your SMSF accountant do their job properly and efficiently, as you will be able to supply them with all the necessary documents at once, rather than having to go back and forth.
Lastly, with the right support, setting up an SMSF does not need to be an overwhelming experience. Your SMSF accountant should become a long-term partner who helps your SMSF stay compliant.