We have seen the emergence of a lot of clients trading shares and derivatives on new and cheaper trading platforms, this is causing an audit problem for investors who are using their SMSF structure i.e. their super money.

The issue:
• Investments via new and usually cheap platforms are not suited for a SMSF.
Normally they are cheaper because they don’t invest in the required reporting infrastructure an auditor needs to see.
• Your SMSF auditor needs to be able to see that the SMSF actually owns the investments and they can only rely on the reporting if it is compliant with the necessary quality standards.
• Yes SMSF’s are suitable for direct investments but you would be wise to consider the above comments.
• These platforms are more suited to individual/company/trust investors.
• As there is a lack of these quality controls there is also a risk to the investor in regard to the security of their money.

If you are using these trading platforms in a SMSF then it is likely your end of year audit will have a qualification.
We would recommend that you ask us before using one of these, obviously the larger more well known and established platforms may not need such an inquiry but it can’t hurt to be sure.

What happens if my audit is qualified?
• A lot of people are in the same boat here, as we have seen an increase in people investing themselves as the markets have fallen and many of these newer platforms don’t comply.
• The qualification is unlikely to result in an audit at this stage only because there are so many SMSF’s in this predicament.
• The reason this is the case is because the ATO have cracked down on SMSF auditors to enforce audit standards strictly or they are penalised.
• With so many SMSF’s receiving an audit qualification the ATO will need to decide how they will respond.

Audit qualifications raise the audit cost obviously each year.

The best course of action is to not engage in activity that will lead to an audit qualification.

It is better to check with us before you commence a new activity in your SMSF. It is always good to remember that the SMSF is your super and as such a highly regulated and protected environment. The SMSF exists to allow you to invest with greater choice and control but only within the rules and regulations in the legislation.
Another timely reminder is that your Trust deed governs which of the rules and regulations you can apply and hence the annual update of the Trust deed is a very worthwhile investment.

We are aware this is daunting but we don’t make the rules, we are here to guide and assist you and we are available for you to call us to discuss any matters when required.