$28k SMSF tax debt wiped. 3-year backlog cleared. No more letters from the ATO.
From losing sleep to clean, clear and up to date.
Summary
Client details changed for privacy.
| Before | After |
|---|---|
| The client’s SMSF invested in an online crypto platform. In 2024 the platform reported large earnings, but none of it was paid. The client tried explaining this to the accountant, but the information wasn’t treated correctly. | We listened to understand the problem and how to approach it. The income needed to come off the return because it should not have been recorded in the first place, as it was never received. |
| The annual statements disclosed that the income was not paid. The first two accountants missed that detail, recorded it as money received, filed the return, and the audit passed. | Amended the 2024 return to the correct figures and removed the phantom income, which was the root of the problem. |
| The ATO assessed $28,000 in tax and auto-enrolled the client into PAYG instalments on money never received. The client hired a new accountant, whose only advice was to pay the debt. | We changed the tax agent for the SMSF and filed the corrected return, and the ATO removed the tax debt. The client stopped doing accountant ping pong. |
| The client was losing sleep over debt collection notices from the ATO for the SMSF. | The notices stopped. We cleared the overdue returns and the phantom income that the auditor and two accountants had missed. This allowed working on the next financial years to get up to date. |
The problem
The 2024 return reported income never received
The fund invested in an online crypto platform promising yield returns. For the 2024 financial year the platform reported a large return on its statement of income. But the statement also said the earnings had not been paid. This detail was missed.
The auditor didn’t catch it and the ATO claimed tax payable
Despite the statement showing it as unpaid, the accountant recorded the phantom income as received, filed the return, and the audit passed. The ATO assessed over $28,000 in tax and auto-enrolled the fund into PAYG instalments on that income. The client now owed tax on money they had never seen, and was on a payment plan.
The second accountant says to pay the tax
The client hired a new accountant, whose only advice was to pay the debt. 2025 and 2026 went un-lodged. Instalments kept going out and notices kept coming. After two years the client came to us, frustrated at not being listened to.
Finding the root cause and fixing the problem
We did not negotiate the debt with the ATO, instead we amended it to show it had no basis.
1. Investigation
We went through the records and traced the reported income. It was never paid, into the wallet or the bank. All the evidence was there, it was simply overlooked. The income was recorded as received when the actual statement said it was not.
2. The evidence
No funds into the wallet and no funds into the bank. The platform’s own statement said not received. Income never received is not derived, so it is not assessable. The trustee signed a resolution admitting as such to support overall coherence.
3. Change the tax agent, reopen the audit, amend 2024
An amended return needs amended accounts. We changed the tax agent, reopened and corrected the 2024 financial statements, and requested the amendment. The new agent refiled 2024.
4. Lodge 2025 and 2026 to get up to date
This freed up the basis to complete the 2025 and 2026 financial year.
The end result
The ATO removed the $28,000 debt and the client has considerable stress relief after two years of facing the same problem.
General information only. This article is not personal financial, tax or legal advice and does not take your circumstances into account. Speak to a qualified, licensed professional about your situation before acting on it.
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