New SMSF Penalty Regime

The new penalty regime for SMSF trustees will now proceed according to a recent announcement. The new laws will give the ATO power to issue a range of penalties to trustees of SMSF that breach the superannuation laws from 1 July 2014.

The new measures means ATO will now have greater flexibility on dealing with SMSF non-compliance by issuing:

– Rectification directions for contraventions of the superannuation law

– Education directions to trustees of the SMSF

– An Administrative penalty regime for SMSF trustees for certain contraventions of the SISA.

A rectification direction will require a trustee to undertake specified course of education within a specified time frame, and provide the ATO with evidence of successful completion of the course.

Where an administrative penalty is imposed it must be paid personally by the trustee or the director of the trustee company and cannot be paid or reimbursed by the SMSF. Where a SMSF has individual trustees, the ATO will impose any penalty on each individual trustee, meaning the penalty will be multiplied by the number of trustees. Corporate trustees, however, will incur only 1 penalty.

Summary of the proposed penalty:

SISA Section

Rule

Administrative Penalty

s35B Failure to prepare Financial Statements $1,700
s65 Lending or providing financial assistance to members & their relatives $10,200
s67 Super fund borrowings, outside the permitted exemptions (e.g. limited recourse borrowing arrangement) $10,200
s84 Trustees have not taken reasonable steps to comply with the In House Asset Restrictions $10,200
s.103(1) & (2) Failing to keep trustee minutes for at least 10 years $1,700
s.104 Failing to keep records of change of trustees for at least 10 years $1,700
s.104A Failing to sign Trustee Declaration within 21 days of appointment and keeping for at least 10 years $1,700
s.105 Failing to keep member reports for 10 years $1,700
s.106 Failing to notify ATO of an event that has significant adverse effect on the super fund’s financial position $10,200
s.106A Failing to notify ATO of change of status of SMSF, e.g. super fund ceasing to be a SMSF $3,400
s.160 Failing to comply with ATO Education directive $850
s.254(1) Failing to provide the Regulator with information on the approved form within the prescribed time upon establishment of the super fund $850
s.347A(5) Failing to complete a form with requested information provided by the Regulator as part of the Regulator’s Statistical Program $850

 

If you have any questions on SMSF, please contact us on 1300 736 453.

 

Article Disclaimer: This information should not be considered personal financial advice as it is intended to provide general advice only. The article has been prepared by Superhelp Australia Pty Ltd without taking into account your personal objectives, financial situations or needs. 
 
The information contained in the article may not be appropriate to your individual needs therefore you should seek personal financial advice before making any financial or investment decisions.