Top Reasons Your SMSF Registration May Be Delayed (and How to Avoid Them)

Establishing a Self-Managed Super Fund (SMSF) can offer greater control over your retirement savings, but the registration process isn't always straightforward. Delays in registering an SMSF are often caused by specific factors, many of which can be avoided if understood in advance.

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Below, we discuss some of the common reasons for delays in SMSF registrations, based on Australian Tax Office (ATO) requirements.

1. History of Insolvency

If any of the proposed trustees or directors of a corporate trustee have a history of insolvency, this can cause a delay in the SMSF registration process. The ATO carefully reviews whether trustees meet the financial management standards, and past insolvency issues may raise red flags.

2. Crimes Related to Dishonesty

Trustees or directors with a criminal history involving dishonesty—such as fraud or embezzlement—are generally disqualified from managing an SMSF. If any trustee has a criminal record related to dishonesty, it may delay or block the registration while the ATO conducts further checks.

3. Previous SMSF History

Trustees who have had prior involvement with SMSFs may encounter delays if those funds had compliance issues. The ATO often scrutinizes the trustee's track record in managing previous SMSFs, especially if there were breaches, late lodgements, or other irregularities.

4. Personal Lodgement and Payment History

Delays may arise if the trustees or directors have a poor history of personal tax lodgement or payment compliance. The ATO takes into account personal tax obligations when assessing eligibility to run an SMSF. Failing to stay up-to-date with personal tax obligations can result in registration being delayed or additional verification checks being required.

5. Super Balance and Income

While the ATO does not require a minimum super balance to start an SMSF, applicants with very low super balances or inconsistent income might face additional scrutiny. The ATO may question the viability of setting up an SMSF if it seems financially unsustainable.

6. Identity Related Fraud & Compromised Tax File Numbers

The ATO also delays SMSF registrations if there is a suspicion that identity fraud has occurred. If any trustee’s identity has been previously used fraudulently, the ATO will require additional time to verify the authenticity of the identity before allowing the SMSF to be registered.

How to Avoid Delays

To ensure a smooth SMSF registration process:

• Confirm all trustees are financially stable and meet legal requirements.

• Ensure there is no criminal history related to dishonesty.

• Review the compliance history of previous SMSFs if applicable.

• Stay up to date with personal tax lodgements and payments.

• Be prepared to provide proof of financial viability for the SMSF.

• Address any identity-related issues promptly with the ATO.

For detailed information, refer to the ATO’s guidelines on setting up and registering your SMSF here.

At SMSF Copilot, we assist clients with every step of the SMSF registration process. Our expert team can help you avoid and guide you through these common delays to ensure your fund is set up correctly and efficiently. Reach out to us today to get your SMSF up and running smoothly!