The ATO has revealed it has identified three distinct factors behind SMSF trustee failures to satisfy their regulatory compliance obligations which in turn can lead to a regulatory contravention.
During a session at the recent Chartered Accountants Australia and New Zealand SMSF Conference 2021, ATO SMSF risk and strategy assistant commissioner Justin Micale told attendees: “We find the main drivers of regulatory contravention financial stress, both personal and/or on a related business, poor record-keeping and the desire to rapidly and excessively grow wealth.”
Micale noted the regulator considers the particular circumstances of each case involving these factors before deciding on the course of action it will take to address the contraventions in question.
“We look at the nature of the breach, meaning what was the contravention and what was the impact it had on the fund. We also look at the compliance history of the trustee and their overall attitude to complying with the regulatory obligations,” he noted.
“As you would expect, we treat a simple mistake very differently from someone who shows blatant disregard to their obligations.”
According to Micale, the compliance history of a trustee is extremely important in these situations.
“We also consider whether or not there have been previous breaches. That’s because we obviously take a dim view of trustees who seemingly do not learn from previous mistakes,” he said.
“And finally we determine what the most appropriate sanctions are to apply.”
He emphasised the important role the regulator believes accountants and advisers should play when their SMSF clients have committed a breach of the superannuation rules.
“The key point I want to make is when contraventions have occurred I encourage you to work with your clients to develop a proposed plan or undertaking to rectify them as soon as possible,” he said.
During his presentation, he also acknowledged the increasing impact identity fraud had on the SMSF sector over the 2021 financial year.
