SMSF Audit Protection Insurance
Protect your SMSF from cost of compliance with an ATO audit
The Australian Taxation Office (ATO) can review or audit your SMSF at any time, either randomly or because it believes a compliance breach may have occurred. Even if you are confident your fund is managed correctly, an audit is time-intensive, documentation-heavy, and can be expensive.
Even if you operate your SMSF with absolute care and follow ATO rules to the letter, you can still be audited at any time.
The Australian Taxation Office can launch an audit of your SMSF either completely at random, or because it believes you have made an error in the administration, record keeping, investment strategy, or general management of the fund.
And here is the bigger issue: an ATO audit is expensive.
The administration time, accountant time, tax agent charges and specialist SMSF audit support can easily run into thousands of dollars. These additional costs impact your SMSF balance directly, which means they reduce the retirement savings of every member of the fund.
SMSF Audit Protection Insurance covers your fund against both the cost of complying with an audit and any penalties your fund or Trustees may have to pay if an error is uncovered during the audit.
Why SMSFs Are Being Audited More Often
The number of SMSFs in Australia is growing rapidly.
So is the number of ATO audits.
High-value SMSFs (with more than $1 million in assets) tend to be at greater risk — but the reality is this:
size does not protect you.
Any SMSF can be audited.
There are specific circumstances which significantly increase the likelihood that your SMSF will be targeted, including:
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Any indication of related-party transactions, where the ATO may suspect members are personally using SMSF assets
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Large or excess contributions into the fund
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A lodgement delay or an apparent error in your SMSF annual return
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A delay or failure to pay your SMSF tax assessment on time
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A qualification or exception noted by your independent SMSF auditors in your Annual Audit Report
These situations raise ATO red flags quickly.
Even A “Clean” SMSF Can Still Be Audited — And It Will Still Cost You
No matter how carefully you manage your SMSF and comply with ATO regulations, you could still be at risk of a random audit. You can have every record, document, decision file, minute, investment strategy statement, trustee declaration and supporting evidence in perfect order, and still be subject to an ATO audit.
And in an audit, the ATO can check everything:
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your administrative processes
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your investment strategy
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your legal structure
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your compliance history
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your contribution records
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your asset acquisition and documentation trails
This takes time. It costs money. And if the ATO finds any breach, both the SMSF and Trustees can be fined personally.
Depending on the seriousness of the error, the additional tax, penalty units, and enforced rectification requirements can be extremely severe.
Audit Protection Insurance is a Key Risk Management Tool
Audit Protection Insurance, combined with Trustee Liability Insurance, provides comprehensive protection:
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against the financial impact of an ATO audit
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against the legal and accounting support required
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against the potential penalties or enforced tax adjustments
This is a very practical level of risk management for SMSFs.
Contact us today for more information, or get an instant free quote below now.
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