The Australian Taxation Office assistant commissioner for superannuation, Kasey MacFarlane, has expressed concern at the regular incidence of self- managed super fund trustees not understanding their basic responsibilities and the continued dominance of individual trustees over corporate trustees.
MacFarlane said there appeared to be more that the ATO and professional advisers could do to ensure that trustees are well informed and make good decisions, even before a fund is set up. She said that it continues to be a cause for concern that trustees seem to lack even a simple understanding of what running a self-managed fund is all about.
“From the perspective of the ATO as the regulator, and all of you as advisers, it is critical that we work together even before a fund is set up so trustees have information and they have the right information so they can understand what the purpose of an SMSF is and what the clear rules are about running an SMSF,” MacFarlane said.
“I know that you are all SMSF professionals and I suspect that you are thinking, gee, thanks for that, but that’s pretty obvious and maybe I should have gone to another session.”
Contravention reports
However, MacFarlane told the 2016 SMSF Association National Conference in Adelaide last month that the ATO receives about 8500 contravention reports each year and most – about 22 per cent – relate to loans and the provision of financial assistance to members and their relatives.
“What we commonly find is these contraventions arise simply because they have not understood that SMSF money isn’t there for them to dip into to support their related businesses … or fund their personal purchases, like cars,” she said.
MacFarlane said the ATO also undertook about 2200 integrity checks on SMSFs in the six months to the end of December 31, 2015, contacting trustees and taking them through a series of questions “to check their understanding of some of the basic rules of running an SMSF”.
“In more than a few cases … they actually ask us to cancel their registration because it’s suddenly become apparent to them that their super fund isn’t like a personal bank account,” she said.
“That’s a concern. People need to have that basic understanding up front. It’s too late once the money has been taken out of the fund. At that time the money is gone, but also there’s been a regulatory contravention so there’s further potential penalties that the trustees have to personally satisfy.”
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