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Admin penalties start with light touch

The ATO had so far applied its new administration penalty powers for SMSF compliance breaches in a moderate and conciliatory manner, according to a lawyer.

“My understanding is that to date the ATO has remitted or is looking at remitting all of the penalties that would otherwise have been issued,” Hall and Wilcox Lawyers partner Heather Gray told the Chartered Accountants Australia and New Zealand National SMSF Conference 2015 on the Gold Coast last week.

“So you might think that is a bit of a soft introduction to the regime, and it probably is, but as people get more used to it, I think we might see enforcement actions stepped up a little bit.

“But nonetheless it’s certainly not the draconian ‘speeding fine’ sort of regime that we thought it might have been when we first looked at it, where we imagined just a blizzard of administrative penalties appearing in everybody’s mailbox because somebody hadn’t kept a proper account or hadn’t lodged something on time.”

Gray emphasised even when the regulator became more serious about the enforcement of those penalties, advisers should not regard it as the “end of the world” for their clients as proper notification would be given and a structured process followed.

“So there will be plenty of opportunity it would appear during the course of the exercise to be able to take steps that make sure that as far as possible that penalty is going to be remitted in whole or in part,” she said.

She also acknowledged In regard to the other new compliance powers, namely rectification directions, the regulator had not been overly officious in its actions there either.

“According to the ATO stats that I’ve seen, there have been 27 of these issued in the first year of operation,” she said.

“So 27 of them in the context of nearly 600,000 SMSFs is not very many, so we can see it’s not something that’s happening every day,” she said.

The third tranche of new compliance powers, being education directions, had not been issued in great volumes either, she said.

“I believe there have been 54 of them issued so far. Not very many, but certainly some,” she said.

She pointed out advisers should inform their clients education orders were likely to be a type of penalty that would only be issued once.

“If you’ve gone and done one compulsory course and then gone straight back out and done the same wrong thing or a different wrong thing, it’s very hard for that person to say they didn’t understand or didn’t know about it,” she said.

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