The ATO has been granted a new set of powers, including the capacity to fine SMSF Trustees for compliance breaches.

 Previously, when an SMSF contravened the super laws, the ATO had a limited range of options available to it to enforce compliance.

 On 18 March 2014, royal assent was given to the Tax and Superannuation Laws Amendment (2014) measures No. 1 (Bill 2014) ushering in new powers for the ATO to give directions and impose administrative penalties for contraventions relating to SMSFs.

 What does it mean?

 This means effective from 1 July 2014, a breach by an SMSF reported in an auditor contravention report can result in the Trustees of the fund being personally liable to pay significant fines of up to $10,200 each.

 What should SMSF Trustees and their advisors do now?

 Here are a few practical tips for SMSF Trustees and their advisors.

–      To avoid these penalties, ensure your SMSF is fully compliant with the superannuation laws from 1 July 2014 so the Trustees do not become liable for a penalty or other sanctions.

–      Given the penalties will also apply to contraventions that were made prior to 1 July 2014 and continue after that date, Trustees and their advisors should ensure all contraventions are rectified as soon as possible and no later 30th June.

 Having said this, the ATO advises that if Trustees are making progress in resolving one or more contraventions by 1 July 2014, it will consider these circumstances in any request to remit any imposed administrative penalties.

 What about a Corporate Trustee?

 The ATO gives an example where a fund lent money to a member or relative and the loan still exists on or after 1 July 2014. In this situation, each individual Trustee will be personally liable for a penalty of $10,200.

 On the other hand, if the SMSF had a “Corporate” Trustee, each Director will be jointly and severally liable for a single penalty of $10,200.

 Just another reason why SMSFs should have a “Corporate Trustee” in place.



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David Watkins, has been providing advice to clients since 1987. He is a Certified Financial Planner, a member of the Financial Planning Association (FPA), and Superannuation Professionals Association of Australia (SPAA).Google Plus

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