More robust tax regime will stop super breaches

The taxation regime needs be more robust in order to catch breaches of the Superannuation Industry Supervision Act (SIS), according to the chief executive of Opez, Cindy McDonald.

Speaking at the Self-Managed Super Fund Professionals' Association of Australia (SPAA) conference, McDonald said many issues of non-compliance that occurred during the financial crisis were tax-based evasion issues, such as fraudulent documents, and those problems weren’t a reportable SIS issue.

“If we have a tax agent regime that’s perhaps a bit more robust, there might be sanctions [for that behaviour] under different legislation,” she said.

“If the ATO does what it says it is going to do and goes out and audits tax agents then some of these issues are more likely to come to light as well,” she said.

McDonald said there had been potential breaches of section 66 of SIS by trustees with small super balances and large margin loans who had used their super to set up self-managed super funds and then used the funds to buy out stocks in their margin loans.

In that case, the SMSF was being used for financial assistance, rather than retirement, she said.

She had also seen pressure from planners to select cheaper auditors as a way of lowering costs, making it clear that advisers don’t necessarily value auditors who maintained high practice standards, McDonald said.