When an SMSF loses Complying Status: What it Means and How to Fix it

Maintaining compliance is crucial for SMSF trustees, but sometimes, things can go wrong, and your SMSF may lose its complying status on SuperFund Lookup. This can be a serious issue, impacting your fund's tax treatment, ability to accept employer contributions, and overall standing. But what does losing complying status mean, and how can you fix it?

To help you understand the implications, we’ll dive into the different SMSF statuses—Non-Complying, Regulation Details Withheld, and Regulation Details Removed—and what each one means for your fund.

What is SuperFund Lookup?

SuperFund Lookup is an essential government tool used to verify the registration and compliance status of superannuation funds, including SMSFs. It’s where employers and other funds check to ensure an SMSF is compliant before making contributions or rollovers.

When your fund’s status changes, it will be reflected here. Understanding these changes can help you take quick action to avoid serious financial and compliance problems.

Check out your SMSF compliance status HERE.

The Impact of Losing Complying Status

If your SMSF is no longer compliant, it may fall under one of three categories: Non-Complying, Regulation Details Withheld, or Regulation Details Removed. Each has different implications:

1. Non-Complying

An SMSF marked as Non-Complying has breached key regulations under the Superannuation Industry (Supervision) Act 1993 (SIS Act). This is the most serious compliance issue your SMSF can face, and the financial consequences are severe.

What It Means: The ATO has determined that your SMSF has not complied with superannuation rules, possibly due to missed lodgements or regulatory breaches.

Consequences: Your fund’s income will be taxed at the top marginal tax rate (45%) instead of the concessional 15%. Employer contributions may also stop, and rollovers become problematic.

2. Regulation Details Withheld

A status of Regulation Details Withheld means the ATO has temporarily paused compliance details for your fund. This is often a red flag that something in your fund’s compliance needs attention.

What It Means: The ATO is withholding regulatory details, possibly due to late lodgements, pending audits, or ongoing investigations. It’s not yet a “Non-Complying” status but is a clear warning.

Consequences: During this period, other superannuation funds and employers may refuse to make contributions or process rollovers with your SMSF.

3. Regulation Details Removed

If your fund’s status is listed as Regulation Details Removed, this is a more drastic measure by the ATO. It means that the SMSF has been deregistered, or the regulatory details have been removed due to significant compliance breaches.

What It Means: Your SMSF is no longer recognized as complying or registered with the ATO. This is often the result of long-term non-compliance or severe violations of the SIS Act.

Consequences: Losing regulatory details can have major tax implications, making it nearly impossible to accept contributions or complete rollovers. Restoring the fund’s status will require significant corrective actions.

How to Get Complying Status Back

If your SMSF has lost its complying status or falls under any of the categories above, it’s critical to act quickly. Delaying action could result in harsher penalties and further complications. Don’t attempt to navigate these issues alone—reach out to SMSF Copilot for expert assistance.

We’ll help you:

Understand why your fund’s status changed
Resolve compliance issues with the ATO
Guide your SMSF back to complying status, if possible

With our support, you can avoid costly mistakes and get your SMSF back on track.

Staying Compliant to Avoid Issues

Maintaining a Complying status is the key to keeping your SMSF operating smoothly and benefiting from favorable tax treatment. To avoid falling into Non-Complying, Regulation Details Withheld, or Regulation Details Removed statuses, make sure you:

Lodge all required returns on time
Review your SMSF’s compliance regularly
Work with your trusted advisers to navigate the complexities of SMSF management

At SMSF Copilot, we provide ongoing support to ensure your SMSF remains compliant. Let us help you keep your fund in top shape and avoid the risks of non-compliance.