“Under s35C(3) and s35C(4), trustees can be imprisoned for up to two years or fined up to 50 penalty units (currently worth $15,650) for failing to appoint an auditor within this time frame,” she said.

“Luckily, there is no record of a trustee being imprisoned for this breach. Still, it's a steep fine for missing a lodgment deadline, especially where the fund has individual trustees, and the fine gets multiplied by the number of trustees.”

Ms Banton said most accountants will have requested an extension with the ATO where their trustee clients are lagging to ensure they can continue to comply with SIS legislation.

“SMSF auditors will always try to assist trustees in meeting their lodgment obligations where possible,” she said.

“While we can fast-track audits, that becomes more difficult the closer we get to a lodgment deadline because the auditor's run rate increases. The problem is compounded when there is a lack of documentation or the assets are complex, resulting in a query that holds up the audit.”

Mark Chapman, director of tax communication at H&R Block, said if an SMSF is self-lodging it has now missed its deadline if the trustees haven’t yet engaged an auditor.

“Given the audit has also got to be done by then realistically if you are a self-lodger it is too late now,” Mr Chapman said.

“An auditor should have been arranged several weeks ago for the February deadline. For trustees who have tax agents, the deadline for lodgement is May so they still have a little bit of time, but they will have to arrange an audit by March at the latest.”

Mr Chapman said if trustees don’t meet their deadline they can be penalised up to $313 for each period of 28 days that the lodgement is overdue for a maximum of five penalty units.

“It can end up being quite expensive and it is not a tax-deductible expense either,” he said.

Mr Chapman said trustees are now becoming more anxious about upcoming changes to legislation that are currently before Parliament, including the $3 million super tax proposal and are trying to plan now in preparation for next year’s lodgments.

“Although the $3 million super tax threshold is still on the horizon and is not an issue for this year, trustees are still now starting to think about what they have to do next year,” he said.

“But the more immediate concern for many SMSFs is the NALI rules. Although they have been kicking around for several years, the ATO said it would be applying the new rules from 1 July 2023, and although it won’t affect this year’s lodgments, accountants and auditors need to be aware of it as the ATO will now be looking for any breaches.”

He said numerous issues can easily cause problems for trustees and although the sector can only rely on the law as it currently stands, the new rules will undoubtedly impact SMSFs and advisers should be taking action now to avoid any breaches.

“We [the industry] think we know what is going to happen but as yet there is no legislation to inform us how it is going to work,” he said.

“Basically, you can’t really plan for anything until that legislation is passed, so there is a degree of concern as the start date is not that far away, and people are wanting to have enough time to protect their assets.”