The Australian Tax Office’s (ATO) new penalty regime could see up to 50 per cent of self-managed super fund (SMSF) trustees fined for contraventions of their duties, an accountant believes.
While the “do-it-yourself” label suggests SMSFs are relatively easy to maintain autonomously, the reality is trustees need to stringently monitor their obligations, according to William Buck director Anna Carrabs.
She said from the 18,000 SMSF breaches lodged with the ATO last year, around half could have been fined up to $10,200 for breaching their duties if the new regime, set to be introduced July 1 this year, was in place.
Looking at the last financial year, the ATO could collect up to $100 million a year in fines from contraventions, Carrabs said.
Common mistakes SMSF investors are making, which subject them to fines, include loaning money to family members from their SMSFs, merging SMSFs and personal assets and taking money from the fund for living expenses, she said.
“Investors need to understand the full responsibilities that they are taking on once they decide to establish a SMSF and the associated demands as a trustee.”
“In many cases trustees don’t understand the strict rules governing these funds which may not be appropriate for their circumstances,” she said.