Having a secure retirement plan is a must in today’s volatile world. This is where the self-managed super funds (SNDFs) come into the picture. These funds give you better control and flexibility over your funds, helping you realise your long-term goals.
However, making the most of this scheme comes at a cost known as the ATO supervisory levy. This is basically the fee the ATO charges to fund the cost of regulating SMSFs. This helps educate trustees and even ensure proper SIS compliance.
Unfortunately, there is still a great deal of confusion about these charges and other relevant aspects of SMSF tax returns. If you are also confused, read this post to gain a clear understanding of the matter.
What Exactly is the ATO SMSF Supervisory Levy Fee, and How Much is It?
The Australian Taxation Office (ATO) charges the ATO supervisory levy fee to fund the cost of regulating SMSFs. These authorities leverage these funds to educate trustees about all the relevant SIS compliance obligations.
The SMSF supervisory levy currently stands at AU$ 259 and has been so since 2015. In cases of newly registered SMSFs, you will need to pay double the annual levy in the first year of the operation.
This means you would pay AU$ 518, including the levy for the current financial year, along with the fee for the next financial year. The catch is that you must pay this ATO SMSF levy even if your funds were registered only through its first financial year.
What Costs Does the ATO Cover With the SMSF Supervisory Levy?
The ATO uses that SMSF levy payment to meet a wide range of expenses related to keeping things going in the department. Some of the most common of these costs include:
- Offering the necessary education and guidance to SMSF trustees
- Addressing and investigating any breaches in the relevant law
- Ensure effective compliance with all the laws related to superannuation laws
- Carry out regular audits and take the necessary enforcement actions.
While it might not be that apparent, these charges play a very important role in retaining the integrity of the superannuation system. These SMSF supervisory levy funds help keep things going properly and help people save for their retirement.
Breaking Down Levy Amounts of Payment Structure
The nature of your funds plays a major role in determining the right amount of fee that you need to pay the department. So, here is a clear breakdown to help you take an informed approach to SMSF compliance in Perth:
- Existing Funds: If you have an existing fund, you will need to pay a levy of AU$259 along with the SMSF levy tax returns.
- New Funds: If your SMSF is new, you will need to pay an advance levy fee of AU$ 518 in the first year. This will cover the fees for the current financial year and the next one.
- Winding Up an SMSF: If you are winding up an SMSF, you do not need to pay any levy for the final year. However, the only condition here is that you have already paid the levy for the preceding year.
Payment Process and Deadlines for the SMSF Supervisory Levy
The due date for SMSF levy returns comes along with the SMSF annual return. So, let’s take a closer look at these dates to get a better idea of the entire thing:
- Self-Prepared Returns: If you manage everything about the return yourself, you must pay the levy by the 28th of February every year.
- Registered Tax Agent Returns: If a registered tax agent manages your returns, you must pay the necessary fees by the 15th of May every year.
Paying these fees on time is not an option if you wish to avoid penalties that can increase your expenses even more. In this case, you can always consider leveraging the expertise of SMSF Accountants Perth to ensure you never miss the deadline.
Is the SMSF Supervisory Levy Tax Deductible?
The self-managed super fund levy is deductible by tax when you are filing your annual returns. This is a great way for you to reduce your taxable income and get more tax benefits to enhance overall savings.
Important Considerations for SMSF Trustees
The role and responsibilities of an SMSF trustee are very complicated, but there is no way around them. It is very important for the trustees to understand the structure of the levy and ensure timely payment for smooth fund management and compliance. According to competent self-managed super fund accountants Perth, here are the important considerations for trustees:
- Make sure you always budget for the annual levy, especially if you have an SMSF that requires advance levy payments.
- Always ensure you make the payments on time to avoid any penalties and ensure self-managed super fund compliance.
- Always make it a point to maintain proper records to get the necessary claims while filing SMSF levy tax returns.
Tips to Plan Your SMSF Levy Payments Properly
Planning your SMSF levy payment properly is a great way to ensure timely payments and avoid any complications with the SMSF annual tax returns process. So, here are some tips to help you out on this front:
- Always Review Fund Liquidity: The first priority is to check the fund’s liquidity. This means you need to ensure you have enough liquid assets to cover the ATO levy for SMSF trustees.
- Allocate Your Funds Early: The next thing you need to keep in mind is to set aside some funds right at the start of the year. This is a great way to ensure timely payment and avoid any unnecessary penalties.
- Consult with Experts: The final thing you need to do is get proper SMSF compliance advice Perth from experts. This should help you better manage the funds and make informed choices.
Wrapping Up
The SMSF is a great way to secure the retirement of working professionals in Australia. This fund also comes with the levy play, which helps the ATO manage the SMSF infrastructure in different ways. So make sure you consider this information and pay your levy fees on time to get the most of the relevant perks.