“Your clients can avoid their SMSF status changing to ‘regulation details removed’,” the ATO said.

“When lodgement may be late, you or your SMSF trustee clients should seek a deferral to lodge SMSF annual returns before the due date.”

The new rules, which come into effect from 1 October 2019, will see funds whose annual returns are more than two weeks overdue have their details suspended from SFLU until they lodge their return.

The rules are expected to cause administrative headaches for funds relying on contributions or rollovers as part of a broader strategy, especially given previous time delays from the ATO in restoring compliant funds to the SFLU system, according to Heffron SMSF Solutions managing director Meg Heffron.

“While the status will be returned to ‘complying’ [under the new rules] when the return is lodged, historically in our experience this process can take six weeks,” Ms Heffron said in a recent blog post.

“Whatever the length of delay, however, it presents many challenges; for example, what if contributions are an essential part of funding LRBA repayments? What if a rollover is being relied upon to settle a transaction?”

While underlining that it was introducing the new rules “to protect retirement savings” from potential early release schemes, the ATO stressed in its update that fund details would be reassessed more regularly.

“On the first business day of each month, we will update SFLU and change the SMSF status to ‘regulation details removed’ when an SMSF has an annual return more than two weeks overdue, [or] ‘complying’ when the SMSF lodges overdue returns during the previous month,” the office said.