The ATO has flagged illegal access to superannuation as a key area where SMSF trustees are not meeting their obligations after noting a significant increase in this activity during the past year, which contributed to more than 750 trustee disqualifications.
In an update regarding its compliance work, the regulator noted that while trustees had obligations to preserve superannuation benefits until they met a condition of release, get their fund audited and lodge an annual return each year, more funds were failing to do so, leading to a higher number of sanctions.
“Actions we took during the 2023 income year included issuing an additional $29 million in income tax liabilities, administrative and tax shortfall penalties, and interest on SMSF trustees and/or members, and disqualifying a total of 753 trustees, who have now been added to our public register,” it stated.
“As compared to the 2022 income year, these compliance actions resulted in double the amount of tax and penalties being imposed and more than triple the amount of disqualifications.
“By far the most common reason for applying these sanctions was to deal with SMSF members identified as having illegally accessed their superannuation benefits before meeting a condition of release.”
The ATO said one of its roles as SMSF regulator was to assist trustees in complying with their responsibilities under superannuation law, but also to take compliance action against those who continue to fail to meet their obligations and seriously breach super laws.
It also encouraged trustees who have knowingly breached their obligations to rectify the contravention quickly to avoid the SMSF losing its complying fund status and to ensure their retirement savings were not at risk.
“You should also consider using our SMSF early engagement and voluntary disclosure service. If you voluntarily disclose contraventions before we commence an audit, we will take this into account when deciding what actions we need to take,” it said.
It also recently stated it had referred a record number of SMSF auditors to the Australian Securities and Investments Commission for breaching independence requirements and failing to gather sufficient evidence during an audit.
