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New Independence Guidelines for Self-Managed Super Funds

As of 1 July 2021, any Self Managed Super Fund will need to be independently audited. As such, if you use STS Accounting Group for your SMSF and Taxation management, we will be in touch to discuss how we ensure that these two services are independent of each other.

The ATO has released new independence guidelines as follows:

Firms are prohibited from providing the following tax services to the trustees of an SMSF that the firm audits:

  • tax planning and other tax advisory services – when the effectiveness of the tax advice depends on a particular accounting treatment or presentation in the financial statements, and there are reasonable doubts as to the treatment or presentation, and the outcome or consequences of the advice will have a material effect on the financial statements
  • tax services that involve assisting in the resolution of tax disputes – where the services involve acting as an advocate before a public tribunal or court in resolution of a tax matter, and the amounts involved are material to the financial statements on which the firm will express an opinion.

Providing other tax services may give rise to independence threats, including any of the following:

  • tax planning and other tax advisory services not covered by the above prohibition (self-review or advocacy threats)
  • tax calculations of current and deferred tax liabilities (or assets) for the purposes of preparing the accounting entries for the fund’s financial statements (self-review threats)
  • tax services involving valuations (self-review or advocacy threats)
  • assistance in the resolution of tax disputes referred to a court or tribunal not covered by the above prohibition (self-review or advocacy threats).

Whether the threats are at an acceptable level will generally depend on such factors as the:

  • nature of the engagement
  • skills and tax expertise of the trustee(s)
  • auditor’s role in providing the service
  • complexity of the matter and service
  • degree of judgment the auditor is required to exercise.

Additional factors relevant to evaluating the level of threats for each tax service are set out in the Code. For example, the following are relevant factors in relation to:

  • preparing tax calculations – whether the calculation will have a material effect on the financial statements being audited
  • tax advisory services – considerations such as
    • the degree of subjectivity involved
    • the extent to which the outcome of the advice will have a material effect on the financial statements
    • whether the tax treatment or advice is supported by established tax law and practices, a private ruling or otherwise approved by us.

If the threats are not at an acceptable level and the circumstances creating the threats cannot be eliminated, auditors will need to consider whether there are any appropriate safeguards that can be put in place.

Examples of safeguards include:

  • using a professional not involved in the audit to perform the tax service, such as having a separate partner and team perform the service
  • having a reviewer not involved in the tax service review the audit or tax work
  • obtaining advice (pre-approval) from us in relation to the tax matter.

What may constitute an appropriate safeguard will depend on the circumstances and type of tax service as set out in the Code.

If no safeguards are available or capable of being applied to reduce the threats to an acceptable level, the auditor will need to decline or end the audit or tax service engagement.

Need more information?

If you would like to discuss your Self Managed Super Fund with an expert – please contact our team today.
We look forward to ensuring you meet the required obligations as well as creating a fund that works in your best interests.

This information was sourced from the ATO website.