Adviser or trustee - who looks after SMSF compliance?
There is some confusion and buck passing between trustees and advisers when it comes to compliance responsibility of a self-managed super fund (SMSF).
Such is the assessment of founding principal and director of Australian Superannuation and Compliance (ASC) Ravi Subramaniam, who warned investors interested in an SMSF to be aware of the downsides, especially if the fund is not compliant.
"The trustee maintains it is the role of the adviser whilst the adviser believes it's the function of the trustee," Subramaniam said.
"With hefty ATO tax penalties of up to 47% plus the Medicare levy on the total value of the SMSF, it is an immensely important area that demands clarity and certainty for investors."
Amidst the confusion, the compliance problem is ending up on the administrator's lap to tackle the administrator's cost, ASC said.
The Australian Taxation Office (ATO) still find holes in compliance such as where SMSF trustees fail to look after assets separately from their personal assets.
Sometimes assets were in the trustee's name instead of the fund, meaning assets could be lost if the trustee went bankrupt or their business went into receivership.
"Each SMSF trustee is different and there is no consistency in who they use as their service providers i.e. investment adviser, financial planner, accountant or administrator," Subramaniam said.
He added as many as 80 per cent of trustees go to their accountants once a year for an audit and to lodge an annual ATO return.
"How can compliance and the regulatory requirements be addressed with such a rudimentary and modest level of attention?"
AUTHOR
Malavika Santhebennur
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