SMSF Academy director Aaron Dunn said there were questions marks over whether some of these funds actually even existed.

“Did they hold assets initially and go through the registration process? But then for whatever reason they’ve decided not to proceed, and the trustees and even the professionals have washed their hands of the responsibilities of running those funds,” he said.

Another group of these delinquent funds, he said, have likely been run, but due to some bad investment decisions they’ve lost their money and they’re not really interested in pursuing it any further.

“They’re not going to want to spend a few thousand dollars to get each outstanding return done. They’ve already lost the money so they don’t really want to pay for that and the professionals aren’t going to want to do those returns without getting remunerated for that,” said Mr Dunn.

The ATO, he said, is trying to clean up the register of delinquent funds and determine whether these funds genuinely exist or not and whether there are any assets in these funds.

“The ATO will then have to make some decisions as to what will actually happen with some of these funds, as to whether they become non-complying, which obviously has a tax consequence,” he said.

“In some instances, [however] where there’s no assets really in the fund then that amounts to nothing and the ATO will ultimately strike them off the register.”

The difficult question is, he said, will be, who is going to get these funds up to speed? While the responsibility would rest with the trustee, it’s unlikely that a professional is going to take them on when there’s no money in it.

“For five years’ worth of returns, then you’re looking at potentially $10,000 worth of costs once you start to incorporate the compliance and the audits and all the stuff. There’s not going to be many people who are going to be prepared to pay that, and not many accountants would be willing to do it for much less than that, in those sorts of circumstances,” he said.

“So the ATO is in a bit of a catch-22 there in terms of, well, how do we actually fix this problem? How do we make sure that the sector is working and working well? We need to clean up a lot of this legacy stuff that’s floating around that no one’s really taking any ownership of.”