ATO Now Requires Title Searches
On 17.08.2023, the ATO issued QC 73156, with little fanfare, but huge implications.
Basically, the ATO view it as mandatory to do a title search, in order for an auditor to substantiate a conclusion that, yes, the fund has no charge over an asset and is compliant with SIS Reg 13.14 (obviously there is an exemption for LRBAs).
I absolutely understand this. This is not only a Reg 13.14 issue but s62 (likely – why put a charge over a fund asset for retirement purposes?), s67 (potentially, has someone used the asset to borrow?) and Reg 4.09A issues (potentially) that can be detected with a title search.
I was at a seminar a few months back and I mentioned I do title searches and the comments were “it’s so low risk, why bother? And have you ever detected anything?”
I could truthfully answer “yes” – because about 2 weeks before, I’d audited a fund where a solicitor put a caveat over a fund asset as part of a broader asset protection strategy for the member. It had to be removed (it took 9 months to finally fix).
When setting up a SMSF or talking costs, this will need to be taken into account as part of the compliance cost of an SMSF, but at $18-30 for most searches, actually a good ‘I can sleep at night’ result for the members of the SMSF.
https://www.ato.gov.au/Super/SMSF-newsroom/Auditors/Checking-for-charges-over-property-assets/