The SMSF Association has stated there has not been enough time to fully assess the operation of a new penalty regime for promoters of tax exploitation schemes, including the illegal release of superannuation, and called for a review of the measures to be pushed back until more data has been obtained.
The industry body made the call as part of its submission to a consultation on updated penalties for promoters, which was introduced through the Treasury Laws Amendment (Tax Accountability and Fairness) Act 2024.
The consultation follows an update to Practice Statement Law Administration (PSLA) 2021/1, issued by the ATO in August, which reflects the changes and its approach to penalties regarding promoter schemes, ATO ruling misuse and illegal superannuation access schemes.
While the association noted the new measures were welcome, it added there had been insufficient time to fully evaluate the operation and impact of the expanded penalty regime.
“Previously, the ATO had to prove that a promoter received some form of ‘consideration’ for promoting a tax exploitation scheme. This requirement made it difficult for the ATO to act in cases where the financial benefits were indirect or non-monetary,” it stated.
“The definition has now been expanded to include any form of ‘benefit’. This change means that whether the reward is direct, indirect, monetary or in-kind, if it encourages the growth or interest in a tax exploitation scheme, the promoter penalty laws can apply.
“These amendments significantly lower the bar for what needs to be proven, making it easier for the commissioner to act against those promoting illegal schemes, including illegal early release schemes targeting superannuation.
“Given these provisions only received royal assent on 31 May 2024, there has been insufficient time to review and assess their efficacy or deficiency.”
The association noted previous promoter penalties under section 68B of the Superannuation Industry (Supervision) (SIS) Act have provided regulators with considerable enforcement powers, but since PSLA 2021/1 was issued three years ago, little evidence as to its efficacy had been produced.
“The consultation paper does not present a case for change. It is unclear what challenges the commissioner may be experiencing in practice or whether emerging behaviours or activities are falling outside the scope of the current legislation.”
It recommended any further legislative changes should be part of a broader, future review that ensures clear evidence of need and called for increased funding for regulators to proactively monitor emerging risks, particularly on social media, to protect both taxpayers and legitimate advisers.
