Accountants and advisers of SMSF trustees should take action to rectify any breaches before the Australian Taxation Office’s (ATO) new powers to penalise non-compliance come into effect on 1 July, The SMSF Academy’s managing director has said.
On 14 December 2013, the government announced it would proceed with law changes that prescribed the ATO with greater powers in dealing with SMSF trustees who breached superannuation law.
The new powers will apply to contraventions occurring from 1 July where the ATO will not only retain its existing powers to deal with non-compliance, but will have the authority to force trustees of a fund to rectify a contravention.
The SMSF Academy managing director Aaron Dunn said it was similar to an enforceable undertaking, but the ATO would prescribe the rectification directions.
“If you have clients with any issues, I would strongly suggest taking action now before 30 June where you can try to negotiate the outcome and the ATO has to accept the undertaking from the trustee,” Aaron Dunn told the Institute of Public Accountants Tasmanian Congress in Strahan last week.
“As of 1 July, the shoe will be on the other foot and the ATO will say: ‘No, you must do this.’
“We do have this window where it’s important to ensure you’re communicating with your clients about fixing the action because if they do enter into an undertaking, the ATO don’t have these directive powers to them til 1 July.”
Dunn said if the undertaking was completed by 1 July, the fact the trustee had commenced the undertaking was action enough to have started the process.
“You’d have to check to be 100 per cent, but my understanding is that if you’ve entered into the undertaking, the undertaking will take precedence over the fact that the ATO can’t then use their directive powers,” he said.
In addition, clients must be put on notice about administrative penalties for breaches of specific sections of the Superannuation Industry (Supervision) Act, he said.
“In particular, look at where they may apply as we are going to see some speeding fine-type [consequences] with failure to complete accounts and statements on time, so $1700 per trustee,” he said.
“With on-time lodgements, which are quite poor, the ATO is seriously looking at 1 July to be issuing penalties so that people start to get the message and get it right.
“So if you do have clients who are outstanding, forget the fact that we’re past 15 May; get it in prior to 30 June or else they will probably be subject to some sort of notice.”
The penalties ranged from $850 to $10,200 and will automatically be imposed once a breach is established.
