The ATO has reminded potential and current SMSF trustees they could be considered a disqualified person for reasons beyond having been convicted of a dishonesty offence, but could request a waiver under specific circumstances.
In an update on its website, the regulator noted someone convicted of a dishonesty offence in Australia or overseas would be disqualified from acting as a trustee and these crimes can include fraud, theft and illegal activity or dealings, regardless of when they took place.
“These convictions are for offences that occurred at any time, including convictions that have been ‘spent’ and those that the court has not recorded, due to age or first offender,” the ATO stated.
The update added civil penalty orders, such as an order to pay a fine or serve jail time, would also disqualify someone from acting as trustee, as would being currently bankrupt or insolvent under administration.
“You cannot be a trustee of an SMSF while you are an undischarged bankrupt. You cannot remain a trustee if you become bankrupt or insolvent after you are appointed,” it said.
While the ATO pointed out past disqualifications it had handed to someone would continue to prevent them becoming a trustee, the same applied to disqualifications from other regulators.
“The ATO can disqualify trustees of an SMSF. This is permanent and is not just specific to the SMSF they were a trustee of at the time,” it noted.
“The Australian Securities and Investments Commission can disqualify directors of companies and individuals who practised in Australian financial services or credit industries.
“The Federal Court can make an order to disqualify a trustee of an Australian Prudential Regulation Authority fund. This is permanent and disqualifies you from operating an SMSF.”
It added anyone who continued to act as a trustee while being a disqualified person was committing an offence and it was not possible for their legal personal representative to act on their behalf either.
Additionally, a company could not act as a corporate trustee of an SMSF where it was aware or had reason to suspect a director of the business was a disqualified person.
However, the regulator stated it was possible to have a disqualified status waived, but to do so the trustee must provide access to detailed information about their offence.
“You can apply for a waiver of disqualified status if the offence leading to the disqualification was not an offence involving serious dishonest conduct,” it stated.
“This means that the penalty imposed for the offence was not either a term of imprisonment for more than two years or fine of more than 120 penalty units.”
“The application must be in writing and include details of the offence, court documents about the offence and consent for us to inquire about the offence to any law enforcement agencies or courts that we think are relevant.”
