The initial audit process

If you have been advised that you are being allocated a “case manager” then it is likely you are going to have your SMSF put through an initial audit. Although this will add a few weeks to the SMSF establishment, it is no cause for concern as we have never had a client fail the audit. Below is an example of the letter you will likely receive. You can expect a similar letter in the mail shortly. The audit is set up in 2 parts.
1. The interview
2. The document review

The interview is a phone meeting where the ATO representative asks a number f questions relating to running an SMSF. You should familiarise yourself with the audit questions page here: http://newbrightoncapital.com/audit

The letter below covers what docs you need to provide. All the required documents are included in your Welcome Pack and explanations on how to access them are detailed under the example letter. The ATO systems cannot handle large files so you will need to go in and seperate the required docs individually. This is good practice anyway so you understand the different parts of the SMSF.

Audit letter example

Below is an example of the letter advising you of the initial audit.
Dear Trustees,
We are following up on our recent phone conversation on 17 January.
You recently applied for an Australian business number (ABN) for The
Trustee For ABC Superannuation Fund. You may have received a letter
confirming the fund’s ABN and that it is registered on the Australian
Business Register (ABR).
You have chosen to be regulated and as part of our regulatory role, we audit
all applications for self-managed superannuation fund (SMSF) registration.
This audit involves:
› checking that the fund is eligible to be regulated by us
› working out if, and how, the fund should be shown on our external register of super funds, Super Fund Lookup (SFLU), at superfundlookup.gov.au
If we decide that the fund is not eligible to be regulated by us we will also
look at whether the fund is eligible to have an ABN. If it isn’t, we will cancel
the ABN.
Your fund’s details are not currently shown on SFLU. They won’t be shown
until we have worked out:
› the fund’s eligibility
› what status to show against the fund.
Until a fund’s status can be confirmed on SFLU:
› super funds will not generally allow rollovers or transfers to that fund
› employers will not generally make super guarantee payments to that fund.

You can find information about how we work out what status to show against
an SMSF, under ‘Self-Managed Super Fund (SMSF) status’ in the frequently
asked questions menu at superfundlookup.gov.au
We’ve withheld the details of The Trustee For ABC Superannuation Fund so
that they aren’t shown on our external register of super funds, Super Fund
Lookup, at superfundlookup.gov.au until we’ve finished the audit. This
means your fund may experience delays when receiving:
› rollovers from other super funds
› super guarantee payments from employers.

You must understand your duties and responsibilities
as trustee of an SMSF
All trustees are equally responsible and accountable for:
› managing and running the fund
› making decisions
› making sure the fund complies with the law.

This is the case even if one trustee is more actively involved in the day-to-

day running of the fund, or you use a professional to do certain tasks on your
behalf. For example, an accountant, lawyer, investment advisor, super fund
administrator or tax agent.
The ATO agent will interview trustees about their roles as trustees. They will
need to show us that they have the knowledge and understanding needed to perform the role of an SMSF trustee or responsible officer of a corporate trustee.

We need to do this phone interview by 7 February.
You can find more information about your role and responsibilities as a
trustee for an SMSF on our website ato.gov.au/smsf
As a trustee of an SMSF, or a responsible officer of a corporate trustee of an
SMSF, you need to make sure that all your personal and related entity tax
obligations have been met. This includes lodging any overdue returns or
statements and dealing with any tax debts.
What you need to do
To help us finish the audit you need to do the things listed below by 7
February:
Trustees are to complete a trustee interview.
Make sure that each person who is a trustee or responsible officer of the
corporate trustee of the fund knows that they need to meet all their personal and related entity compliance obligations. You can phone us on 13 28 61 if you need help with lodgement.

Also, give us the information and documentation listed below:

– copy of the trust deed
– copy of any instruments varying the trust deed
– copies of meeting minutes
– evidence of account/s held by the fund at banks and other

financial institutions (including share trading accounts), the
evidence should be in the form of a bank statement or
letter issued by the bank/financial institution
– details of the investment strategy prepared for the fund
including any asset acquisitions
– copies of the acquisition or transfer contract for all assets
acquired by the fund if applicable
– details (including amounts) of any rollovers/proposed
rollovers from commercial or industry funds to the SMSF,
including the benefit statements issued by the commercial
or industry funds
– details of any rollovers proposed from other SMSFs for
each member of the fund. The details must be in the form
of a member benefit statement and/or letter issued by the
trustees of the other SMSF
– copy of the signed trustee declaration form (publication
number NAT 71089) for each of the trustees

– details and/or supporting evidence (such as invoices) of
any commissions, fees or other payments made, or

intended to be made, in relation to the setting up of the fund
and/or rollover or payment of superannuation benefits to
members (including: date, amount and reason for the
payment, name and ABN/TFN of the individual or entity to
whom the payment was made.

We will keep withholding your fund’s details from SFLU if you don’t:

– meet your compliance obligations
– phone your audit officer, and
– give us the information we’ve asked for.

We may also cancel your ABN based on the information that is available to
us.

We have included an important information sheet with this letter. It explains
where to send your information, the audit process and your rights and
obligations.
We should finish the audit by 19 March. However, this will depend on
the specific details of your case.

Yours faithfully,
Deputy Commissioner of Taxation

NEED HELP?
We want to work with you to fix
any problems as early as
possible. If you have any
questions, you can phone us on
13 28 69 between 8.00am and
5.00pm, Monday to Friday.
SMSF NEWS
We encourage you to subscribe
to SMSF News to get information
about regulatory and
administrative topics, as well as
any developments of interest to
the industry. To subscribe, go to
our website ato.gov.au, search
for ‘Subscribe to SMSF News’,
then fill out the SMSF News
subscription form.

Preparing the paperwork

Additional Information
You have already signed every required document electronically. The “EstablishmentDocuments.pdf” in the welcome pack contains every document that is asked for. However the ATO servers have a limit on file size so you need to seperate the docs. The “EstablishmentDocuments.pdf” is a culmination of the other files in the Welcome Pack. You can seperate the EstablishmentDocuments.pdf or print off the docs individually and scan them back to the ATO rep. Details on where to find the seperate docs are below.

Paperwork to forward to the ATO

The trust deed
copy of the trust deed and company docs
You can find these in your Welcome Pack under…
Item 1 “Your Establishment documents”
Deed_1234.pdf. is the trust deed
Constitution_12324.pdf are the company set up docs
IMPORTANT – only sign the last page of the deed and the last page of the constitution.
The trust deed and constitution contain many templates that are there to be used at a later stage if required you do not sign these when establishing the fund. These templates include forms for add other members, making changes and offering loans.

Varying the deed
copy of any instruments varying the trust deed. As this is new SMSF there are no variations. If you have added any members after establishing the fund you will have been sent signing docs to add the member.

Minutes of meeting
copies of meeting minutes.
There are 2 sets of minutes.
1. The minutes for the company and
2. The minutes for the SMSF
These meeting minutes are just records of what is agreed to be done.

What is required here is the “initial minutes of the SMSF” which can be found in the SMSF_minutes_1234.pdf. It is is the 2nd document.
For your information the SMSF minutes file includes the following documents…
a) The initial minutes to establish the fund
b) The investment strategy
c) Trustee consent form
d) Application for membership
e) Nomination of dependents
f) Trustee declaration

Evidence of accounts
evidence of account/s held by the fund at banks and other
financial institutions (including share trading accounts), the
evidence should be in the form of a bank statement or
letter issued by the bank/financial institution

If you have set up any accounts under the SMSF name include them here.

Investment Strategy
– details of the investment strategy prepared for the fund
The investment strategy can be found in the SMSF_minutes_1234.pdf. It is is the 2nd document. This investment strategy is a generic one that satisfies all ATO requirements. You are to amend the investment strategy regularly to ensure it considers the needs of the members in retirement.

Asset purchases
copies of the acquisition or transfer contract for all assets
acquired by the fund if applicable

If you have made any purchases get copies of the payment receipts or invoices.

Rollovers
– details (including amounts) of any rollovers/proposed
rollovers from commercial or industry funds to the SMSF,
including the benefit statements issued by the commercial
or industry funds
and
– details of any rollovers proposed from other SMSFs for
each member of the fund. The details must be in the form
of a member benefit statement and/or letter issued by the
trustees of the other SMSF

If you have received a rollover already the other fund will have mailed out a “rollover statement”. If you have have received your rollover but do not have the rollover statement ask us as it might have been sent to our PO Box. If you do not have the rollover statement and neither do we you’ll need to request a copy from your other fund.

Trustee declarations
– copy of the signed trustee declaration form (publication
number NAT 71089) for each of the trustees

The trustee declaration can be found here.

Invoices and receipts
– details and/or supporting evidence (such as invoices) of
any commissions, fees or other payments made, or
intended to be made, in relation to the setting up of the fund
and/or rollover or payment of superannuation benefits to
members (including: date, amount and reason for the
payment, name and ABN/TFN of the individual or entity to
whom the payment was made.

Anything that has been paid using SMSF funds. Also the invoice for the establishment of the SMSF. This will have been emailed to you at the time of application. If have misplaced this contact us and we will forward a copy to you.

QUESTIONS?
Once you have sent in the docs and completed the audit interview your SMSF approval should come through within 2 weeks.

If you are unsure of anything just be reminded that all the establishment docs are in the welcome pack and if you have any queries we are here behind the scenes to assist.