ATO confirms tougher admin penalties stance

The latest ATO statistics regarding SMSF enforcement activity have revealed a change in policy has netted a $1.4 million jump in administrative penalties collected for the 2019 financial year.

The data shows in 2017/18 the regulator collected $1.7 million in administrative penalties, while the ATO received $3.1 million of these types of fines in 2018/19.

“We have imposed more penalties and there has been a bit of a shift in our response. That’s because what we’ve found is where we took a more lenient approach in the past, the data showed in 85 per cent of all cases we remitted all penalties, the trustees were repeat offenders and had another contravention reported,” ATO SMSF segment assistant commissioner Dana Fleming told attendees at the recent Self-managed Independent Superannuation Funds 2019 SMSF Forum in Melbourne.

“So we’re going down the path of imposing some penalties just so there’s a message that there is a consequence for bad behaviour.

“Just because you come forward and say ‘I made a mistake’, we’re not going to let you off scot-free, so there’s some incentive to comply in the future.”

Certain sections of the SMSF sector had already noted this new approach described by Fleming.

With regard to other enforcement actions, she acknowledged the most effective among SMSFs that needed some form of rectification was the enforceable undertaking (EU).

“Our data we’ve reviewed for the last couple of years showed us we’re far more likely to get a rectification if there’s an enforceable undertaking,” she noted.

“It makes sense [because compared to a direction to rectify] one’s a unilateral ‘you must fix this’ [instruction] from us, [while with] the other the SMSF trustee agrees to fix it so there’s far more likelihood of a better outcome if they actually agree to an enforceable undertaking.

“So we’ve got a preference for going down that path going forward.”

Despite this preference toward issuing EUs, this action was slightly down year on year, with 138 handed out in 2017/18 and 131 dispensed in 2018/19.

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