FROM 1 July 2014 a new penalty policy for trustee breaches came into existence for Self Managed Super Funds (“SMSF”).
The policy, which will be administered by the Australian Taxation Office (ATO), will mean a dramatic increase in the level of fines for breaches by Trustees of DIY funds.
Each year approximately 7500 of Australia’s 525,000-odd DIY SMSF’s do something which results in the SMSF’s auditor reporting a breach to the ATO.
Under the new policy the ATO will target the worst contraventions, including providing a loan from the fund to a member. The penalties for contraventions, which will range from $1700 up to $10,000, are required to be paid by the Trustee personally.
The policy change has been applauded by SMSF auditors and advisers who have long complained that breaches by Trustees were not taken seriously by the ATO.
Whilst not likely to be the ATO’s main focus in the early stages of the new policy, mistakes such as the Trustee accidently withdrawing money from the fund’s account and depositing it into the Trustee’s personal account will attract substantial fines, even if subsequently rectified by the Trustee.
Levitt Robinson has extensive experience in advising clients in relation to DIY SMSFs. If you wish to discuss any issues associated with your fund please contact Louise Cassar.