What happens if your SMSF lodgement is late?

Why is lodging your SMSF annual return so important?

Lodging your SMSF annual return is crucial for maintaining SMSF compliance and avoiding hefty penalties.

This return encompasses multiple facets: the income tax return, regulatory information, and member contribution reporting.

It also enables trustees to pay the SMSF supervisory levy to the ATO annually. Failing to meet the lodgement deadline can result in significant consequences, such as the loss of valuable tax concessions, potential penalties and general interest charges on the unpaid tax liability.

The ATO acts as both a tax collector and compliance regulator. This dual role means the ATO scrutinises whether funds adhere to superannuation rules, not just tax obligations. Auditors support this process by reporting non-compliance. However, the pivotal information they collect hinges on timely annual return submissions.

Therefore, lodging your SMSF annual return on time is not merely a formality. It ensures your fund is able to accept members’ contributions and rollovers, its  “Complying” status remains intact safeguarding against increased tax rates and preserving benefits essential for managing a successful self-managed super.

SMSF Lodgement dates 2024

The Stake Super team will handle all of the preparation and lodgement of the SMSF annual tax return by the dates displayed below:

What is the penalty for late lodgements of SMSF tax returns?

Here is a brief guide to the potential penalties that could occur if you submit your lodgements late:

Super Fund Lookup Status

When an SMSF tax return is more than two weeks overdue, the compliance status of the fund may change to 'Regulation Details Removed' on the ATO's Super Fund Lookup site. This change triggers significant repercussions. A fund flagged with this status cannot receive superannuation guarantee payments from employers or manage rollovers from other superannuation funds. Instead, any super payments must go into a different super fund until compliance is restored.

To return to a 'Complying' status and regain eligibility for employer contributions and rollovers, lodge the SMSF Annual Return promptly. Once lodged, the status will update to 'Complying' on the first business day of the next month.

Failure to Lodge (FTL) penalty

The Australian Taxation Office (ATO) imposes Failure to Lodge (FTL) penalties for late self-managed super fund tax returns. An FTL penalty accrues at one penalty unit per 28-day period (or part thereof) that the tax return remains overdue. The penalty is capped at five units, meaning it maxes out once the tax return is 140 days late.

From 7 November 2024, each penalty unit is valued at $330. This could result in a maximum penalty of $1,650 for an overdue tax return. Essentially, the longer the delay, the higher the penalty, but it won't exceed this total.

FTL penalties are not considered deductible expenses for SMSFs. This elevates the financial impact, making punctual lodgement not only a regulatory obligation but also a financially prudent choice.

Administrative penalties

When it comes to late lodgements of self-managed super fund tax returns, administrative penalties are a crucial consideration. These penalties are linked to breaches of the Superannuation Industry (Supervision) Act 1993, specifically under section 35B(1), which mandates trustees to prepare necessary accounts and statements. 

The administrative penalty imposed is significant and calculated in penalty units. Each unit is valued at $330, and failure to prepare statements and accounts under section 35B(1), a penalty of 10 units is applicable. This means each trustee is liable for a  $3,300 fine for - non-preparation of accounts. The peculiarity lies in how these penalties are distributed – while individual trustees face cumulative penalties, corporate trustees encounter a single penalty amount. This distinction results in individual trustees of a four-member SMSF potentially facing a collective penalty of $13,200.

It's essential to highlight that these penalties cannot be paid from the SMSF itself. Trustees are expected to cover these expenses personally, ensuring compliance is maintained swiftly to avoid financial repercussions.

Navigating administrative penalties requires careful attention to the Superannuation Industry (Supervision) Act 1993 to avoid costly oversights.

Other consequences and penalties of non-compliance

Below are some additional penalties that can be further actioned by the ATO:

• Notice of non-compliance: SMSF's income is taxed at the highest marginal rate rather than the usual concessional rate.
• Education direction: Trustees may be instructed to undertake additional SMSF education.
• Enforceable undertaking: An agreement with the ATO to rectify non-compliance.
• Rectification direction: A directive to fix any compliance breaches.
• Administrative penalties: Financial penalties applied by the ATO.
• Disqualification of a trustee: Individuals may be disqualified from acting as a trustee.
• Civil and criminal penalties: Legal repercussions could follow.
• Allowing the SMSF to wind up: The ATO might permit the SMSF to close.
• Freezing an SMSF's assets: The fund's assets could be immobilised to prevent further non-compliance.

How does Stake Super help lodge SMSF tax returns on time?

An SMSF cannot lodge an SMSF Annual Return (i.e. SMSF Income Tax Return) without undergoing a financial audit and compliance audit every financial year with an independent ASIC-registered SMSF auditor.

Stake Super co-ordinates your fund’s audit with external independent auditors.

Stake Super prepares financial reports, annual trustee minutes/resolution, trustee declarations, member statements, investment reports, SMSF Annual Return and audit letters for the auditors to conduct the financial audit and compliance audit and issue the auditor’s report for the financial year.

Stake Super also ensures all the transactions impacting your fund’s income, expenses, assets, liabilities and member balances for the financial year are recorded and reconciled in the respective accounts in the SMSF Administration system 'Class Super' to produce the financial reports, annual trustee minutes/resolution, trustee declaration, member statements, investment reports, SMSF Annual Return and audit letters.

Stake Super organises for the SMSF trustees or trustee director(s) to sign the financial reports and accompanying documents after the audit is completed but before the signed audit report is issued.

Once Stake Super receives a signed auditor’s report, Stake Super organises electronic lodgement of your SMSF Annual Return with the ATO. If the SMSF has debt to pay to the ATO as a result of lodgement, Stake Super organises the payment of tax debt from the Stake Wallet. If the SMSF is eligible for a refund as a result of lodgement, it is received in the Stake Wallet.

Is it possible to get an extension on the lodgement date?

It is possible to get an extension under serious circumstances, such as severe illness or being impacted by a natural disaster. Request an extension with the ATO.

Just remember there is no guarantee that your request will be approved.

This is not financial product advice, nor a recommendation that a self-managed super fund (‘SMSF’) may be suitable for you. Your personal circumstances have not been taken into account. SMSFs have different risks and features compared to traditional superannuation funds regulated by the Australian Prudential Regulation Authority (‘APRA’). Stake SMSF Pty Ltd, trading as Stake Super, is not licensed to provide financial product advice under the Corporations Act. This specifically applies to any financial products which are established if you instruct Stake Super to set up an SMSF. When you sign up to Stake Super, you are contracting with Stake SMSF Pty Ltd who will assist in the establishment and administration of an SMSF under a ‘no advice model’. You will also be referred to Stakeshop Pty Ltd to enable your trading account and bank account to be set up in order to use the Stake Website and/or App. For more information about SMSFs, see our SMSF Risks page.