Not paying the extra SMSF supervisory levy for newly registered funds

Normally a brand new super fund will need to pay an additional $259 super levy but what if instead the super fund did not have any assets in the financial year the fund was setup until the next year - therefore requiring a return not necessary to be lodged in the first year - on the 2nd year when preparing the tax return - will you need to take up that additional $259 levy?

A return not necessary doesn’t require payment of any levies or payments in that matter.

Has anyone come across this situation before & if so, what was your solution?

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There is no option for a return not necessary for new super funds. The rules changed when the ABN registration changed, where you need to say the fund has assets to get an ABN.

What you need to do is to do financials for the year have them audited and lodge the tax return. Unfortunately if you have no assets then you can’t and the ATO won’t help as they say you lied on the ABN application.

The work around we were given was for the client to have held $10 cash on hand at year end and then deposit it into the bank the next year. For every fund we setup we collect $10 cash and bank it so that we do not lie on the ABN application.

Hope this helps.

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I’m not sure on your answer re the additional levy but I expect you will need to take up the additional levy when it lodges its first return. The levy a continuing SMSF pays in its 2018 annual return is actually for 2019 so when a Fund lodges its first return it needs to pay for the current year and for the next year. That is, if its first return lodged is the 2018 return,it will need to pay the levy for 2018 and 2019.

In relation to AngelaR’s comments that ‘there is no option for a return not necessary for new super funds’, I do know that if your SMSF does not have assets set aside for the benefit of members in the first year it was registered, you can ask the ATO to flag the SMSF’s record as ‘return not necessary’ if it meets the following conditions and confirms in writing that

  • although registered, it had no assets and did not receive contributions or rollovers in the first financial year
  • it has provided documentary evidence of the date the SMSF first held assets and commenced operating, for example the SMSF’s first bank statement
  • it will be lodging future returns.

You can lodge this request via the Tax Agent Portal mail option, selecting ‘Superannuation’ as the topic, and choose the mail subject ‘SMSF new registrant for a return not necessary request’.

Hope this helps.

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There is absolutely an option to lodge a RNN for an SMSF in the first year. I understand that the rules changed in one financial year but there were changed back. A RNN can be lodged via the ATO portal messaging service. Details are here: Super lodgment | Australian Taxation Office

Yes, the SMSF has to pay the increased super levy in their first year of lodgement, even if the actual first year was a RNN, and the due date for the first return will still be the earlier due date of 28th February.

We found the following work around for the BGL software to be the best solution:

Say the trust deed date was 5th June but due to timing issues, the rollovers hadn’t been deposited until July that same year. The date formed and system start date in the BGL Fund Details screen is changed to 1/7/20xx and BGL will automatically calculate that the $518 rather than the $259 ATO Super levy is payable on the lodgement of that year’s tax return.

After that tax return is lodged, the date formed can be changed back to the trust deed date, or can remain at 1/7/20xx.

Hope that helps.

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Thank you Christine, you have answered my question perfectly. Changing the system start date did not work. Left the date formed at 1 July as the trust deed date is recorded below that field also - just for other people reading this forum who also have this problem.