“Lodging your SMSF annual return on time is a fundamental part of your obligations as an SMSF trustee,” the ATO said.

“We’re taking this approach because non-lodgement combined with disengagement indicates that retirement savings may be at risk.”

The ATO said funds could have their status on SFLU reinstated when all overdue lodgements were brought up to date.

The office would perform checks on the first business day of each month and suspend or reinstate funds on the SFLU system depending on the lodgements that had been received in the previous month.

If SMSF trustees did not think they would be able to lodge their annual returns in time, the ATO said, they should call and seek a deferral to lodge.

During the time where the SMSF had their SFLU status suspended, members would need to inform their employer to make contributions into an alternative fund as the SMSF would not be able to accept employer contributions until its status was reinstated.

Once reinstated, the member would need to roll over any benefits received in the interim back into the SMSF, the ATO said.

The update follows comments from ATO SMSF future client experience director Edward Chung at the recent Class Connect conference, indicating non-lodgement was a key area of focus for the office in uncovering non-compliant funds and illegal early super release schemes.

“Our observation is from those SMSFs that don’t lodge, they have more regulatory risks,” Mr Chung said.

“When we describe our non-lodgement population, we have two groups: lapsed lodgers and never lodgers. Lapsed lodgers are those who were lodging on time but now have one or more overdue lodgements, and never lodgers are new SMSFs who have never lodged.

“When there is an APRA fund balance reduction of a member and they belong to a never lodger, there is a high indication that there has been an illegal early release.”