Advisers must be vigilant about the strict regime and tight deadlines when dealing with disqualified SMSF trustees, according to a specialist SMSF lawyer.
“It’s quite surprising that you might have clients who you don’t even know are disqualified because they haven’t told you that they were committed – perhaps when they were young they had a misdemeanour or went off the straight and narrow for a temporary aberration of their life and got a fine or [were charged with] an offence,” DBA Lawyers director Dan Butler said.
According to the ATO, the person must cease being or acting as an SMSF trustee immediately.
“You’ve got to stop straightaway if they’ve been convicted of an offence involving dishonesty or maybe you’ve found out they have a shady past,” Butler warned.
“The remaining trustees must notify the ATO of the change within 28 days and the fund has six months to resolve its status to make sure it’s in line with being a regulated fund.
“By the way, you do need the member’s consent before you give them the bullet, unless you have a deed that they’ve signed upfront allowing them to be jettisoned at any time.”
However, the trustee was able to apply to the ATO for a waiver within 14 days after the conviction in order to continue acting as a trustee, he said.
“But they must resign straightaway, so there’s a very tight time frame here,” he said, adding the waiver was only applicable if the maximum penalty was less than two years in jail.
“It’s a fairly strict regime and the trustee will commit an offence if they continue to be or act as a trustee when they know they are disqualified.”
Penalties included fines and imprisonment, he said.
