Key self-managed super fund industry groups have come out in support of new Australian Taxation Office powers which target delinquent SMSF trustees.
While the majority of trustees act correctly, there are a “stubborn cohort” who refuse to comply with current ATO laws, according to Superannuation Australia.
“For too long the ATO was limited in what it could do, and in many instances the ultimate penalty of making a fund non-complying was too much of a sledgehammer. The ATO had limited other powers though to coerce conformity. This has encouraged a number of trustees to ignore or breach their obligations on a regular basis,” said superannuation products and service manager for Superannuation Australia, Reece Angland.
Under the current laws even small offences, such as putting jewellery into an SMSF, could result in jail time.
“The current provisions are too inconsistent, almost draconian. As a result, the ATO often doesn’t enforce penalties because they simply don’t fit the offence,” SPAA director of technical and professional standards, Graeme Colley, told the Switzer Super Report.
“These new rules will be similar to income tax penalties and cover a whole range of actions a trustee might take.
The proposed new powers will allow the ATO to; issues fines of up to 60 penalty units (a penalty unit is currently valued at $170), compel trustees to undertake training or education; and compel trustees to re-sign the DIY Fund Trustee Declaration.
Angland says the new rules will also reduce the burden on SMSF advisers, who have to regularly deal with delinquent trustees to get material lodged and provide appropriate documentation.
“Advisers should be talking with these delinquent trustees now to encourage them to come clean and avoid penalties in the future,” he said.