In the past, the ATO supervisory levy is not a cost I would have paid a lot of attention to when advising clients on the costs of setting up and running a self managed super fund (SMSF).  I might need to reconsider given some recent changes.

The ATO supervisory levy is an annual cost imposed on every SMSF.  The levy is designed to recover the cost of monitoring the SMSF sector.

The ATO SMSF levy has increased from $45 six years ago to $259 for 2013/14.  That’s an increase of 575 per cent!

In the past, the levy was paid in arrears at the time the fund’s tax return was lodged.  This could be nearly 12 months after the financial year had ended.  Going forward, the levy will be paid in advance.  The increase in the cost of the levy itself and the change in timing has resulted in a significant increase in the levy over the next couple of years.

Any SMSF trustee involved in preparing or lodging the 2012/2013 SMSF return may be shocked to discover that they will have to cough up $321 for the supervisory levy.

How did the ATO calculate this mysterious figure of $321 when the supervisory levy was supposed to be $191?

The $321 ATO levy for the 2012/2013 year is made up of two components:

• the $191 levy for the 2012/2013 year, and
• $130 (i.e. 50 per cent of the 2013/14 ATO levy of $259).

The full effect of the ATO levy increase and advance payments will be felt when lodging the SMSF return for the 2013/2014 financial year. You can expect a whopping ATO supervisory levy of $388. The levy amount of $388 represents the remaining half of the 2013/2014 year levy ($129), and the full amount of the 2014/2015 year levy, paid in advance ($259).

From the 2014/2015 financial year, the ATO levy will revert to a single annual amount of $259, paid in advance for the following financial year. The assumption, of course, is the federal government doesn’t further increase the SMSF levy in the meantime.

New Funds

If you’re planning to set up a new SMSF during the 2013/2014 financial year, then allow for an ATO supervisory levy of $518 at lodgement time. The hefty amount of $518 represents the levy amount for the 2013/2014 and 2014/2015 financial years.

From the 2013/2014 financial year onwards, the double payment of the ATO levy will apply to any new SMSF to ensure that the levy is paid in advance, as is required by already established SMSFs.

Source: The Financial Review Trish Power PUBLISHED: 07 Aug 2013 00:32:05