The ATO’s Compliance Crackdown in 2025: Overdue SMSF Annual Return

Written by Prime Financial Group, Accounting and Business Advisory. 

The ATO is doing all it can to crack down on non-lodgment of Self-managed Superannuation Fund Annual Returns (SAR) in 2025. We cover risk factors for non-compliance, consequences of non-lodgment, and key requirements for trustees in the process of completing the SAR.

The ATO issued a critical reminder last month regarding lodgment of the SMSF Annual Return (SAR). The regulator’s recent update reflects the ATO’s laser-like focus on the issue of non-lodgment of SMSF annual returns in 2025.

Why Lodge a SMSF Annual Return (SAR)?

According to the ATO, lodging the SAR is the most important compliance obligation to be satisfied by trustees.

Even if the Fund hasn’t had any activity, or has no tax liability, SAR lodgment is required every financial year. Data included in the SAR covers the income tax return, regulatory information and member contribution reporting. The SAR also enables payment of the SMSF supervisory levy.

There are significant implications for anyone that fails to lodge a SAR, including financial penalties and lost tax concessions. The timing of lodgement is also particularly important; failure to submit a SAR within two weeks of submission deadline means the Fund’s Super Fund Lookup status may change to 'regulation details removed', which can prevent the Fund from receiving rollovers and employer contributions.

Why Is the ATO Focused on Non-Lodgment of SMSF Annual Returns (SAR) in 2025?

The ATO uses data from SMSF Annual Returns in the administration of conditions like concessional and non-concessional contribution caps, DVI 293 tax, and upholding rules around transferring balance caps.

In addition to accurate reporting and governance of the superannuation system, the SAR, and non-lodgement of this annual report is considered a serious red flag for non-compliance, including illegal early access to superannuation. This is especially true for newly established funds who have not lodged their first SAR. Indeed, in February this year, more than 4,500 funds established in the 2023 financial year were yet to lodge their first (and now, well overdue) SAR. Meanwhile, 85,000 funds were still yet to lodge their annual return for 2023, and 54,000 SARs were still outstanding for the 2022 financial year.

Speaking at the SMSF Association’s national conference in Melbourne, Deputy Commissioner for the ATO, Emma Rosenzweig said the ATO understands the failure to submit a SAR may be an attempt to hide further breaches of compliance.

“While only 3 to 4 per cent of SMSFs have a contravention reported, that's only based on those who have actually lodged. We expect a significantly higher proportion of non-lodgers have contravened the regulatory rules,” Rosenzweig said.

How to Ensure SMSF Annual Return (SAR) Obligations Are Met

A SAR must be lodged each Financial Year. New SMSFs must Lodge by 28 February (following the financial year end). Meanwhile, existing SMSFs with a tax agent must lodge by 15 May. Always check your specific lodgment program dates, and start preparations early.

To ensure you meet your obligations, it’s good to ask yourself:

• Has my SMSF lodged an annual return every year since it was established? (Even if your fund has had no activity)
  
• Did I lodge my SMSF’s annual return on time?
  
• Is my SMSF listed as ‘complying’ on the Super Fund Lookup (SFLU) register?
  
• Have I received any ATO notices regarding overdue returns?
  

How to Lodge Your SMSF Annual Return

1. Finalise Your SMSF Audit
   

Before you can lodge your SAR, your SMSF must be audited by an approved SMSF auditor. They will review your fund’s financial statements and assess compliance with superannuation laws.

A SAR cannot be lodged until:

• The audit is fully completed, and
  
• You have received the audit report.
  

Note: It’s wise to keep a copy of the signed audit report with your fund's records in case the ATO requests it later.

1. Prepare Your SMSF Annual Return
   

You’ll need the following detailed information of the Fund for the entire financial year:

• Income (investment returns, contributions, etc.)
  
• Expenses (management fees, insurance premiums, etc.)
  
• Member balances
  
• Contributions and rollovers
  
• Pension payments (if any)
  
• Tax credits (such as franking credits)
  

1. Lodge Your SMSF Annual Return
   

Once your SAR is ready, it may be lodged either:

• Through a registered tax agent, or
  
• Via the ATO’s Online Services for Business if you are confident lodging yourself
  

1. Pay Any Tax Owed
   

If your SAR shows that your SMSF owes tax, you must pay by the due date, even if your lodgment was delayed. Make payments via BPAY, EFT, or credit card using the details provided in the lodgment acknowledgment.

Conclusion

The SAR and pre-requisite independent audit is not optional, but a legal requirement under superannuation law, which is designed to ensure the healthy function and administration of $4.2 trillion worth of assets held within Australia’s superannuation system.