ATO's 2025 Focus: Key Points for SMSF Trustees

The Australian Taxation Office (ATO) has issued new guidance on auditor compliance for 2025, emphasising the critical role that SMSF auditors play in maintaining the health and integrity of the sector. With over 32,000 new funds entering the sector in 2024—a 21% increase from 2022-23—the SMSF population has grown to over 625,000, holding more than $1 trillion in assets.

Key Areas of Focus for 2025

Market Valuations

The ATO is heavily scrutinizing market valuations. As SMSF trustees, it's crucial to ensure that your auditors verify and retain sufficient evidence to support the market value of your assets. If there's insufficient evidence, auditors must consider modifying the Independent Auditor's Report (IAR) and lodge an Auditor Contravention Report (ACR) where necessary.

Consistent Asset Values

In 2024, the ATO contacted auditors where SMSFs reported unchanged asset values across several income years. This program will continue in 2025, with a focus on reviewing auditors where asset values remain the same and no ACR is lodged.

High-Volume Auditors

The ATO will also focus on auditors who audit a large number of SMSFs, particularly those who regularly undertake over 1,000 audits per year or have rapidly increased their audit numbers. The ATO plans to visit auditors at their offices to review their audit processes.

Disqualified Trustees

Auditors must confirm that SMSF trustees are not acting as trustees or directors of a corporate trustee while disqualified. The ATO will review auditors where information indicates trustees have acted while disqualified and no ACR has been lodged.

High-Risk Auditors

The ATO will use its data and intelligence to identify high-risk auditors. These auditors will continue to be audited and referred to ASIC if they have not complied with their obligations. Auditors with low, fixed-price business models are a particular concern, as these models can lead to lower quality audits, especially for SMSFs with complex investments.

Auditor Independence

Auditor independence is another key focus. Approved SMSF auditors must comply with independence requirements as part of their professional obligations. The ATO will focus on auditors it considers high risk, including those conducting in-house audits, with reciprocal auditing arrangements, long associations with clients, or a large proportion of their client base from a single referral source.

What This Means for SMSF Trustees

As an SMSF trustee, it's essential to understand these areas of focus and ensure your auditor is compliant with ATO guidelines. This will help maintain the integrity of your SMSF and avoid potential issues with the ATO.