Treasury unveils penalty regime for SMSF trustees
Treasury has outlined the details of its administrative penalties regime for trustees of self-managed superannuation funds (SMSFs), which will apply from 1 July, 2013.
The draft legislation will give the Australian Taxation Office power to issue rectification directions, education directions and administrative penalties to individual trustees who contravene the SMSF rules.
The exposure draft, which is open for submissions until 14 September, 2012, points out that the regulator currently has a limited number of tools available to “address instances of non-compliance”.
As it stands, the regulator can either make an SMSF non-complying for taxation purposes, apply to a court for civil penalties to be imposed, accept an enforceable undertaking in relation to a contravention, or disqualify the trustee of an SMSF.
“Applying current penalties can be costly and time-consuming and the potential consequences can be disproportionately high,” according to the exposure draft.
Jeremy Cooper has said that making an SMSF non-compliant is “the nuclear option”, since all members of the fund would suffer the consequences of the fund losing its favourable tax status.
“The regulator is unlikely to use his existing range of powers except in cases of significant non-compliance with the law,” according to the draft legislation.
The exposure draft makes clear that any penalties imposed under the new administrative regime are payable personally by the person who committed the breach, and must not be paid or reimbursed (in the case of an education direction, for example) from assets in the SMSF.
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