April 2026 Newsletter

What’s new in SMSF?

As a trustee of a Self-Managed Superannuation Fund (SMSF), it is essential to stay informed about recent updates, regulatory changes, guidance and warning signs issued by the Tax Office. Being aware of these updates helps you ensure compliance and reduces the risk of penalties or disqualification as a trustee.

ATO flags Non-Compliant Trustee Representation Letters (TRL)

TRL includes a written representation from trustees about the Financial Report under ASA 580 and Compliance Engagements ASAE 3100, which must be obtained before completing the audit.

Recent reviews by the Tax Office have highlighted that TRLs are often missing from audit files, left unsigned or undated, incomplete, or signed after the audit has been completed. These issues are often not being reflected in the Independent Auditor’s Report (IAR).

The Tax Office has now specifically stated that where a compliant TRL is not obtained, the auditor may be required to qualify the Independent Auditor’s Report and lodge an Auditor Contravention Report (ACR), where the reporting criteria are met.

Transfer Balance Account Reporting (TBAR)

If your SMSF has had any transfer balance account (TBA) events during the March quarter, you are required to lodge a Transfer Balance Account Report (TBAR) by 28 April 2026.

Events you may need to report include starting a retirement phase income stream, commencing a death benefit income stream, full or partial commutations of retirement phase income streams, rolling back pensions to accumulation phase, and paying lump sum benefits from a pension.

If no events have occurred during the quarter, no lodgement is required.

Treatment of SMSF Establishment Expenses

Recent guidance from the Taxation Office released in February 2026 provides clarity on the treatment of SMSF establishment expenses. If a member pays SMSF setup costs personally, the fund can reimburse them provided the reimbursement is handled correctly.

The SMSF must charge the costs against the member’s benefits under Regulation 5.02 of the SIS Act and seek reimbursement once the fund has sufficient cash available, such as after the first rollover or contribution is received.

When handled correctly, the reimbursement is not treated as a contribution or a loan and therefore does not breach SIS borrowing or contribution rules. However, if reimbursement is not claimed, the trustee’s payment may be treated as a contribution to the SMSF.

In simple terms, prompt reimbursement avoids contribution or borrowing issues, while failure to reimburse may create a reportable non-deductible contribution.

Know the Warning Signs of SMSF Schemes Before You Act

Trustees should be cautious of individuals promoting SMSF arrangements without holding a valid financial licence. Registration can be verified through the ASIC Financial Adviser Register.

Fraudulent schemes may involve illegal early access to superannuation, tax avoidance arrangements, promises of zero-risk investments, or investment opportunities without a Product Disclosure Statement (PDS).

Some schemes also involve artificial or unnecessarily complex structures that lack a genuine commercial purpose.

The Australian Taxation Office may impose penalties and, in serious cases, trustees can be disqualified from managing an SMSF. This may also result in the SMSF being wound up.

If you are approached about a suspicious arrangement, you should report it confidentially using the ATO tip-off service or by calling 1800 060 062.

ATO Scam Warning

The ATO does not send unsolicited emails or SMS messages containing links or QR codes asking individuals to log in to online services.

Scammers commonly create fake websites and login pages designed to steal usernames, passwords, and personal information.

Rental Appraisal Needed to Avoid NALI Issues

When leasing an SMSF property to a related party, trustees should obtain a rental appraisal at the start of the lease to ensure the arrangement reflects market value.

Failure to do so may result in a breach of Section 109 of the SIS Act 1993 and could also trigger Section 295-550 of the ITAA 1997 relating to Non-Arm’s Length Income (NALI), potentially resulting in tax at 45%.

For example, an SMSF may lease a property to a related party in March 2024 for five years. A rental appraisal at the start confirms market rent at $1,000 per week indexed to CPI. Two years later, the rent increases to $1,060 per week, while comparable properties are now renting for $1,500 per week due to market changes.

Where the lease commenced on market terms, trustees are generally not required to adjust rent during the lease term simply because market rates have increased significantly.

Trustees should review and update rent at the end of the lease period and obtain a new rental appraisal at that time.

How Can We Help?

Even if you are familiar with superannuation rules, it is strongly recommended to seek advice from an SMSF specialist.

The consequences of non-compliance can be significant, including auditor contravention reports, penalties imposed by the Australian Taxation Office, and in serious cases, the fund being deemed non-compliant or wound up.

Our team is committed to helping ensure your fund remains compliant with superannuation laws. If you require assistance with any of the matters discussed above, please do not hesitate to contact our office.