Delinquent SMSF trustees on notice

The proposed increase in Australian Taxation Office (ATO) powers puts delinquent SMSF trustees on notice says Superannuation Australia, a wholly owned subsidiary of Taxpayers Australia Inc.

“While the vast majority of trustees do the right thing” said Reece Agland, Superannuation Products and Services Manager for Superannuation Australia, “there is a stubborn cohort of trustees that regularly do the wrong thing or fail to lodge annual returns.”

“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.”

The proposed new powers will give the ATO more options to take action against delinquent trustees. The ATO will have the power to:
– issue a fine of up to 60 penalty units (currently $10,200)
– compel trustees to undertake training and education
– compel trustees to sign or re-sign the DIY Fund Trustee Declaration.

“The ATO should be better able to tailor its penalty to the breach and bring more pressure to bear on trustees to do the right thing,” Agland said. “The ATO will be able to compel trustees to undertake training to better understand their obligations, will be able get undertakings from trustees as to future behaviour, and ultimately be able to fine them for repeated behaviour.

“We believe this will not only help the ATO secure better compliance but reduce the burden on SMSF advisers who have to constantly battle with these types of 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.”