The Institute of Chartered Accountants (ICAA) has broadly welcomed the increased powers granted to the Australian Taxation Office (ATO) with respect to Self Managed Superannuation Funds (SMSFs).
According to the ICAA's superannuation specialist, Liz Westover, the new penalty regime open to the ATO will play an important role in encouraging and ensuring trustee compliance with the Superannuation Industry Supervision Act (SIS Act).
In an article directed at members of the ICAA, Westover said trustees and their advisers would need to be familiar with the measures and understand how they changes might impact on them if they did not adequately meet their responsibilities in operating their own fund.
Referencing the background to the changes, she said that one of the recommendations to come out of the 2010 Cooper review into Australia's superannuation system was the need to improve the powers of the ATO.
She said the result was legislation which gave the ATO greater flexibility to impose penalties or take action on SMSF trustees who breach rules contained in the SIS Act.
Westover noted that, previously, the only real power the ATO held was to disqualify a trustee or to make a fund non-complying.
"Jeremy Cooper described this as the 'nuclear' option, given the tax consequences for the members of the fund – an SMSF could effectively lose nearly half its assets in tax penalties should it be made non-complying.
She said the new penalties would enable the ATO to take action for less serious breaches, as appropriate.
"It is not expected that these penalties will be issued on all breaches but the ATO will be looking towards the behaviour of the trustees and attempts (or lack of) to comply with superannuation laws. Blatant and repetitive breaches are likely to have penalties imposed. Minor, inadvertent breaches will be less likely to have penalties imposed. ," Westover said.
Originally published on SMSF Essentials.
