At the 2026 SMSF Association National Conference, ATO Deputy Commissioner Ben Kelly made the regulator's priority for the year very clear. It is not exotic structures or clever schemes. It is funds that have not lodged.
As at 31 December 2025, more than 93,000 SMSFs had one or more outstanding annual returns. Around 20,000 of those funds had never lodged a return at all, not once since registration.
The reason the ATO cares so much is that the numbers behind those numbers are ugly. Funds that register, roll over a member's super, and then go quiet are the highest risk group in the sector. On the ATO's analysis, nearly 40 per cent of them end up illegally accessing super.
So a late return is not treated as a paperwork problem. It is treated as a signal.
What actually happens
If your fund has outstanding returns, the ATO can change the fund's status on Super Fund Lookup to show it is not complying. That sounds administrative until you realise what it does. Employers cannot make contributions to a fund with that status, and other funds will not process rollovers to it. The fund effectively stops being able to receive money.
Beyond that, the ATO can issue administrative penalties directly to trustees. Those run from 5 to 60 penalty units depending on the breach, which for offences committed after 7 November 2024 works out to between roughly $1,650 and $19,800.
Here is the part that surprises people. Those penalties are payable by the trustees personally. They cannot be paid or reimbursed out of the fund's assets. If there are two individual trustees, each is separately liable, so the fund with two trustees can receive two penalties for the same breach.
In serious or repeated cases, the ATO can disqualify a person from acting as a trustee of any SMSF, and disqualified trustees are named on a public record.
If your fund is behind
The single most useful thing to know is that this gets better with engagement and worse with silence. The ATO's stated approach is early intervention, and a trustee who comes forward with a plan is in a very different position from one who is found through data matching.
Practically:
Work out how many years are outstanding and whether the records exist. Bank statements, contract notes, rental statements, loan statements. If records are missing, they can usually be reconstructed from bank data and third party sources, which costs time but is not impossible.
Get the oldest year done first. Each year has to be audited before it can be lodged, and they have to be done in sequence.
Expect the catch up work to be quoted separately from the ongoing annual fee, and expect any provider worth using to tell you the total before they start rather than after.
And do not let the fund keep operating as though nothing is wrong while the returns pile up. Contributions going into a fund that cannot lawfully receive them create a second problem on top of the first.
There is no version of this where waiting improves the outcome.