The ATO has informed SMSF trustees that when they make a voluntary disclosure about any mistakes that have occurred within their fund, they are acting as a whistleblower and allowing the regulator to speak with other parties about the problem and potential remedial action.
The regulator made the statement as part of an update on its website where it encouraged SMSF trustees to inform it of any mistakes as soon as possible and that it was in the best interest of trustees to do so.
“The best way to do that is through our early engagement and voluntary disclosure service. We’ll then work with you to help fix any contraventions and help you get your SMSF back on track,” it stated in the update.
It added when a trustee uses its early engagement and voluntary disclosure service, an SMSF regulatory contravention disclosure form must be completed in full.
“When you complete the form, you give us consent as a whistleblower, which allows us to talk to others about your disclosure – this includes your authorised representative and the other trustees of your SMSF,” the ATO said.
“If you don’t give us this consent, we can’t action your voluntary disclosure,” it added, noting trustees could keep their identity confidential by making an anonymous disclosure through its tip-off service.
The ATO said issues that may be relevant for a tip-off include cash transactions to avoid tax obligations, not reporting or under-reporting income, tax avoidance and illegal phoenixing activity.
It noted the disclosure form will require the provision of all relevant facts and supporting documentation related to the mistake and a rectification proposal or proposed enforceable undertaking to rectify the contravention as soon as possible.
The update also reiterated the ATO’s willingness to act with trustees who were open with the regulator, as well as its approach to those who have wilfully breached their trustee obligations.
“When you voluntarily disclose unrectified contraventions before an audit, we take it into account when we decide what enforcement action we’ll take and the appropriate level of remission of administrative penalties,” it said.
“We always prefer to help a fund rectify contraventions and remain compliant – and with the majority of the disclosures we receive, this is what we do.
“However, if we find a deliberate and blatant disregard of the rules, we may use harsher enforcement actions, including disqualifying the trustee.”
