Anyone who has their own self-managed superannuation fund (SMSF) will know about the need for an audit.
In a series of articles, we outline some of the things you should know – or might like to know – regarding superannuation fund audits.
We are starting with one of the most common questions – why do I need an audit?
Why do I need an audit?
Because the law says so. It is pretty simple really.
However, while that is true, the reasons are deeper than that. Why is there a law requiring audits? After all, other taxpaying entities don’t always need an audit.
Superannuation funds are taxed at a lower rate than other entities like companies and many individuals. Most funds pay a maximum tax rate of 15%, which is less than many individuals (up to 49%) and companies. Also, superannuation funds don’t pay Medicare levy or deficit repair levy or any other levy that individuals pay. And, once you start drawing money from your fund, the fund might pay no tax – that’s right, a tax rate of 0% – or close to no tax, and money you take out might also be tax free to you (although if you invest the money you take out, you might pay tax on the earnings from the investment).
However, to pay tax at 15% (or 0% or something in between), the government has made rules – administered by the Australian Tax Office (ATO). Meet the rules and you are fine. One of the rules is that your fund must have an annual audit.
And that is where the experienced SMSF Audit team at GNS Group come into the picture – to keep you out of trouble, comply with the rules and give you on-going access to lower SMSF tax rates of 15% or perhaps even 0%.
What is required from an SMSF audit?
All super funds, regardless of their size or type, must be audited on an annual basis. The audit involves two parts:
Financial audit – To examine the fund’s financial report to ensure it conforms to accepted accounting policies
Compliance audit – To determine the fund’s compliance with specific requirements of the law.
From this, the SMSF auditor provides an audit report. The audit report doesn’t need to be lodged with the fund’s annual return, so the timing of it can be more flexible according to how you’d like to operate.
The audit needs to be completed by the date the fund’s annual return is due – which is usually in May or June of the next year. But often the GNS Group Accountants will complete SMSF tax return and arrange for immediate SMSF Audit. Melbourne has lots of SMSF audit options, but at GNS Group, we DO NOT send your SMSF Audit overseas just to save money, we keep it in Australia and support Australian jobs.
If the SMSF auditor finds any breaches of the rules, the SMSF auditor should advise you – and may have to report these to the ATO. But lets work through any breaches and issues and keep you complying.
If you have any queries about the SMSF audit process, please call Melbourne SMSF Auditor Philip Ruth in our office 03 9499 7444.
Next time – Who can be an auditor?