ATO, Compliance

ATO can act on trustee impasse

Disqualified trustees ATO Acting trustee SIS act

SMSFs at an impasse due to no trustee willing to take action can ask the ATO to step in to appoint someone to manage the fund.

In the event all members of an SMSF have been disqualified, the ATO will intervene by delegating a representative to administer the fund in the interim, a senior SMSF auditor has noted.

ASF Audits head of education Shelley Banton said the regulator had the authority under the Superannuation Industry (Supervision) (SIS) Act to take action by appointing an acting trustee with the aim of restoring compliance to the SMSF.

“What happens if all the trustees are disqualified and they refuse to sign any documentation or appoint another trustee?” Banton told attendees of an ASF Audits webinar today.

“This is really interesting because this is where the ATO can step in and suspend or remove trustees under section 133 of the SIS Act and they can do this to those that have been disqualified or where their conduct may endanger the financial position of the fund.

“Obviously divorce springs to mind when we’re thinking about this and you’ve got one partner who won’t sign anything or won’t engage and won’t do anything.

“So the ATO will appoint either an individual trustee or a professional trustee who will then be the acting trustee until a new trustee can be appointed.”

She noted in this situation, there are two possible outcomes based on the fund’s ability to meet its core obligations within the relevant superannuation legislation.

“Now the acting trustee’s obligation is then to get the fund back to compliance or they’re going to wind the fund up,” she said.

“Going down this path isn’t for the faint-hearted obviously because it will take a lot of time and a lot of money, but this is where you can get assistance from the ATO depending on what’s happening in the fund.”

However, the outcome may be different in the scenario where all trustees of an SMSF declare bankruptcy as a recent case has highlighted trustees may be able to successfully apply to be exempted from disqualification.

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