SPAA welcomes SMSF penalty changes
The proposed changes to the penalty system for self-managed super funds (SMSFs) will allow trustees to be treated more equitably by the Australian Taxation Office (ATO), according to the SMSF Professionals' Association of Australia (SPAA).
The proposals, due to take effect on 1 July 2013, first appeared in the Cooper Review which found the ATO had limited options when it came to sanctioning SMSF trustees who failed to comply with the superannuation law.
"Under the current regime, the ATO has basically three options: the draconian move of making a fund noncompliant for tax purposes, applying to a court to impose civil penalties, or largely turning a blind eye," said SPAA chief Andrea Slattery.
Slattery said making a fund noncompliant could result in halving the account balance of an SMSF, while applying to a court could be time-consuming with no guarantee about the outcome.
"At the same time, trustees should not be able to think they can be noncompliant with impunity," she added.
The proposed regime, she said, would allow the ATO greater flexibility to impose penalties in tune with the nature of the breach.
Under the new rules, a trustee could face penalties up to $6,600 for contravening certain aspects of the Superannuation Industry (Supervision) Act.
"Another option open to the ATO is to require trustees to attend an SMSF educational course about their responsibilities, as well as directing trustees to undertake specified action to rectify a breach of the legislation," Slattery added.
She said the change to the SMSF penalty system would be a positive initiative, suggesting to SPAA that many breaches of the Act are more by accident than design.
AUTHOR
Staff Writer
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