ATO, Compliance

ATO flags trustee eligibility concerns

ATO SMSF trustees eligibility

The ATO has reminded potential SMSF trustees and directors of SMSF corporate trustees about their eligibility obligations.

The ATO has reminded SMSF members of their eligibility obligations as trustees of their fund or directors of the corporate trustee of their fund.

The regulator stated members could not be trustees and directors of corporate trustees if they fitted the ATO’s description of a ‘disqualified person’.

“Anyone 18 years old or over can be a trustee or director of a super fund as long as they’re not under a legal disability (such as mental incapacity) or a disqualified person,” the ATO said in an update on its website.

“To knowingly act as a trustee, a trustee director or an office holder of a corporate trustee (such as secretary), while being a disqualified person, is an offence.”

It pointed out a potential trustee or director could be considered a disqualified person if they:

  • had been convicted of a dishonest offence, in any state, territory or a foreign country,
  • had been issued with a civil penalty order,
  • were currently bankrupt or insolvent under administration, or
  • had been previously disqualified by the ATO or the Australian Prudential Regulation Authority (APRA).

“The commissioner of taxation as regulator can disqualify a trustee. This disqualification is permanent and is not just specific to the SMSF you were a trustee of at the time,” it noted.

“The Federal Court can make an order to disqualify a trustee of an APRA fund. This is permanent and this disqualification does not allow you to operate an SMSF.”

It also said potential trustees or directors could apply to have their disqualified status waived if the penalty for the offence that had led to the disqualification was not a term of imprisonment for more than two years or a fine of more than 120 penalty units.

“The application must be in writing. It must include details of the offence, court documents about the offence and give consent for us to inquire about the offence to any law enforcement agencies or courts that we think are relevant,” it added.

Last year, Heffron senior SMSF specialist Alex Denham said offences that could prevent someone being a trustee may date back many years and may also include those not registered with the ATO, and should be voluntarily disclosed by those seeking to be trustees.

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