The Australian Securities and Investments Commission (ASIC) is currently focusing its enforcement activities on the compliance activities of directors of companies including those acting as SMSF corporate trustees.
ASF Audits head of education Shelley Banton noted specifically the regulator is concentrating its efforts on companies and SMSF corporate trustees that are not paying the ASIC annual review fee on time.
“What ASIC is doing is deregistering these companies, which means the fund will no longer be able to accept employer contributions or [member] rollovers and they will fail section 17A of [the Superannuation Industry (Superannuation) (SIS) Act],” Banton told advisers attending her technical webinar last week.
“So what typically happens when that company is deregistered is that the fund assets will vest in the commonwealth and ASIC will assume legal ownership of those funds.
“Then the trustees will have to apply to ASIC or the court to reinstate the company. [The court could also] appoint a new trustee.”
She pointed out in situations where a new trustee is not appointed, the assets being held by the SMSF will be transferred into ASIC’s unclaimed monies account. To avoid or at least manage this outcome, she recommended a series of actions directors of an SMSF corporate trustee must undertake.
“So it’s really critical to make sure that the ASIC annual review fee is being paid on time, that the contact details are kept up to date with ASIC and also making sure the fund has a quality deed and a company constitution in place in case there is a change of trustee that’s required,” she said.
She stressed the importance of the continued operation of a corporate trustee even when a decision has been made to wind up an SMSF.
In particular, she advised against disbanding the company involved before the closure of the super fund has been properly completed.
“The timing of the wind-up of a corporate trustee is really critical to make sure that the fund continues to comply with section 17A [of the SIS Act] before it is [closed],” she warned.
