The recent changes to Super Fund Lookup means trustees can rollover their super benefits quicker and more simply, in addition to many other benefits. Advisers and accountants looking to assist their clients to get their SMSFs investing will also love this evolution in superannuation.
The ATO maintains a publicly available register, Super Fund Lookup (SFLU), for all super funds that have an ABN. SFLU provides confirmation that an SMSF is complying and is eligible to receive rollovers and employer contributions. Changes have been made to ensure the status of each super fund is clearer.
Before the recent changes, an SMSF could have the status of either ‘complying’ or ‘non-complying’ on SFLU. There was also a third option which caused a lot of confusion: ‘status to be determined’. Previously, when an SMSF was established, it would have this status until the first SMSF annual return was lodged. The ATO would then issue a notice of compliance and update the status to ‘complying’. Until that point, there was confusion as to whether the SMSF could receive rollovers or employer contributions.
ELECTION TO BE REGULATED IS BEING PROCESSED
In recognition of this, the ATO has updated the status’ they use on SFLU, as well as being clearer on the process they now follow. Newly registered SMSFs will first have the status ‘election to be regulated is being processed’. At this point, the ATO will undertake checks to determine if the SMSF is being used to gain illegal early release to super benefits or whether individuals associated with the SMSF are ‘tax persons of interest’. These might be people who have outstanding tax returns or tax debts, have a history of insolvency, crimes related to dishonesty or a poor history with a previous SMSF.
These checks by the ATO can take between 2-56 days to complete. Unfortunately, the SMSF cannot receive rollovers during this period. They can however receive related party contributions, but it is unlikely non-related employers would make contributions.
The SFLU now have a number of different statuses for an SMSF:
A ‘registered’ SMSF is identified as a fund able to receive rollovers and contributions, is regulated by the ATO and has not yet been issued with a notice of compliance (or non-compliance). Several days after the fund has been established, and assuming they pass the ATO checks, the status will change to ‘registered’.
Previously, the change in status to ‘complying’ occurred when the fund lodged its first annual return. The shorter timeframe now eliminates confusion about the SMSF’s ability to receive rollovers or contributions. A few days after the status has changed to ‘registered’, the notice of compliance will be issued by the ATO and the status updated to ‘complying’.
A ‘non-complying’ SMSF is either a non-resident fund or has been issued with a notice of non-compliance. This will likely be due to serious contraventions of the super laws resulting in the assessable income of the SMSF being taxed at the highest marginal tax rate. It will remain in this status until it has been issued with a notice of compliance.
REGULATION DETAILS WITHHELD
Another status that is used is ‘regulation details withheld’. An SMSF could have this for several reasons, including:
Again, these checks could take up to 56 days to be completed. The ATO recommends that rollovers are not made to SMSFs that have this status.
REGULATION DETAILS REMOVED
Regulation details may also be completely removed from SFLU. This has caused our clients numerous issues as the SMSF can no longer receive employer contributions. SMSFs with this status typically have overdue annual returns. The ATO, again, recommends that rollovers are not made to SMSFs with this status.
Once the overdue annual returns are lodged, the status is not updated immediately. Instead, it changes on the first business day of the following month.
With the popularity of SMSFs continuing to rise, many trustees are eager to setup their fund, rollover super benefits and begin investing. Whilst the establishment documents can be prepared very quickly, it is important to manage their expectations as it may take some time before the SMSF can receive rollovers or contributions. It is also important to ensure the trustees’ other affairs are in order, as this may delay the establishment of their SMSF. If the ATO has any concerns about a registration, they will make contact with the trustee or tax agent, to let them know they are investigating the application.
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