ATO clarifies trustee disqualifications

ATO SMSF trustee disqualification

The circumstances influencing when the ATO looks to disqualify an SMSF trustee have been detailed in a new piece of guidance.

The ATO has issued guidance specifying the reasons and the circumstances that will lead it to the disqualification of individuals from acting as an SMSF trustee or director of a corporate trustee.

The regulator has stipulated three main concerns that would lead it to disqualifying an individual from running their own superannuation fund. These are when the individual has shown deliberate and blatant disregard for superannuation law, when a contravention of the rules cannot be rectified and when the SMSF has been misused by the person to benefit from the favourable tax environment offered by the retirement savings systems.

It also pointed out under superannuation law it is able to disqualify a person from being a trustee of an SMSF or a director of a corporate trustee if that individual has contravened the rules and if the regulator believes the individual is not a fit and proper person to be an SMSF trustee determined by their character and circumstances.

However, the ATO stated disqualification is not its priority when looking to take enforcement action against an SMSF trustee that has committed a compliance breach.

“Disqualification is a decision we do not take lightly and only after considering all other enforcement actions. We prefer to help trustees rectify contraventions and comply with the law, and keep the fund in the super system. However, sometimes we need to take a tougher approach,” it said.

As part of the guidance, the regulator issued a reminder it keeps a register of those people who have been disqualified from acting as an SMSF trustee or director of a corporate trustee.

“On our website we keep a register of individuals we have disqualified from being a trustee since 2012 and update it on a quarterly basis. The disqualified trustees register is publicly available and regularly checked by SMSF professionals, including SMSF auditors. It may also be accessed by your employer and financial institutions,” it noted.

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