“From a retirement income perspective, this is a significant tax concession which carries significant risk for all parties concerned,” said Mr Burgess.

“As a result, the manner in which an ECPI claim is calculated and indeed reported is a significant area of concern to the ATO from both a tax revenue perspective and as regulator of SMSFs.”

Mr Burgess said the ATO has focused its compliance program this financial year on situations where a member hasn’t met the minimum annual pension standards for either the 2012 or 2013 income year.

“Additionally we’ve expanded our focus to include those members in partial pension phase that may be incorrectly offsetting income tax losses.”

Whilst the results for the 2013/2014 financial year are still being collated, Mr Burgess said the ATO’s compliance program in this area for 2012/2013 resulted in 78 per cent of the reviewed funds having their SMSF annual return amended.

Mr Burgess said the ATO will also continue to focus on a range of other areas including limited recourse borrowing arrangements, non-arm’s length income, non-commercial loans, dividend stripping and pooled investment trusts.

The growth of the SMSF sector coupled with the current economic climate, Mr Burgess said, means “closer scrutiny of where and how SMSFs are investing their funds is inevitable”.

He also said the SMSF industry should expect to see changes to the Auditor Contravention Report and Independent Audit Report as a result of the ATO’s MyGov initiative.