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Penalty regime won’t compromise ATO

A panel of industry experts has rejected the idea the ATO’s responsibilities as the sector regulator could be compromised as the new compliance penalty regime builds momentum and is potentially regarded as a solid fiscal revenue stream for the government.

The question was posed at the 2015 selfmanagedsuper roundtable in light of the budget announcement the dollar amount attached to penalty units imposed for breaches of the Superannuation Industry (Supervision) Act would increase in July and be indexed every three years in the future.

In response, AMP SMSF head of technical policy and education Peter Burgess said he did not think there was any need for concern regarding ATO impartiality.

“The ATO’s got a pretty good record of that not being the case. I remember when the supervision passed to the ATO, back in 1999 or 2000, there were stories then it was like taking Dracula to the blood bank and that hasn’t worked out that way,” Burgess said.

“The ATO has had an education focus and so forth, so if history’s anything to go by, that’s unlikely to be the case.”

SMSF Association director of technical and professional standards Graeme Colley pointed out the way the revenue from the penalty regime was accounted for in the budget showed the issue was unlikely to be a problem.

“The original penalties, which I think were about $500 million, didn’t show up in the budget because it’s the penalty and that doesn’t form part of the budget papers,” Colley said.

Crowe Horwath SMSF senior manager Stephen Hogg said his experience with the ATO to date showed it was very reasonable in its treatment of breaches contained in audit contravention reports, indicating it favoured rectification rather than punishment via a fine.

“We’ve seen an increase in ATO audit focusing on our SMSFs and our experience has been if you work constructively with the ATO, in a timely manner, are upfront, on the front foot, and you communicate well with them, it is very likely the ATO will mitigate any penalties that might come through,” Hogg said.

Colley agreed SMSF Association members, like Hogg’s clients, had similar positive experiences over breach situations when dealing with the tax office.

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