Steer SMSF trustees away from schemes

The ATO has warned SMSF trustees must seek professional advice to protect themselves from targeting by promoters of unlawful schemes and other questionable practices.

Deputy commissioner James O’Halloran told the SMSF Association inaugural SMSF Expo for trustees, held in Melbourne over the weekend, that advisers, accountants, tax agents and even the ATO must help trustees stave off unscrupulous promoters of schemes that “sound too good to be true”.

“Indeed the most common regulatory breaches that we see in SMSFs relate to fundamental rules that prohibit lending fund monies or assets to members,” O’Halloran revealed.

“The tenet here is the SMSF is an entity in its own right. It’s not family money, it’s not members’ money in isolation, it is in fact totally separate and independent and therefore needs to be treated that way.”

O’Halloran noted these unlawful schemes may contain comprehensive paperwork and advice that appears professional and formal but warned professional advisers must advise trustees against them.

“Quite often in practical terms if they sound too good to be true perhaps they are. The SMSF environment comes with limitations and it certainly doesn’t necessarily augur well just because the paperwork looks right,” he said.

“So I think the rule of thumb is quite simple: if it looks too good, if it looks too advantageous, one should have an alarm bell straight away and seek advice from the ATO, from the adviser or perhaps from the tax agent.”

He also told trustees attending the expo the ATO is in the early stages of issuing excess determinations and tax bill notifications to SMSF trustees who may have exceeded their transfer balance caps introduced in the 2016 federal budget super reforms.

The regulator is monitoring SMSFs closely at this stage to see if members and trustees are in danger of exceeding their caps.

“In fact, since Christmas there has been some 8,000 SMSFs who have voluntarily reported their balances to the ATO even though you’re not required to until July because they’ve got some extra visibility out of the account information that we can then verify,” O’Halloran said.

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