A technical specialist has suggested the types of SMSF trustee contraventions that have increased from year to year as revealed in the latest ATO statistics have overtones of the specific areas of focus the regulator has had in recent times, such as the need to obtain market valuations for fund assets.
Smarter SMSF technical and education manager Tim Miller noted data disclosed in the ATO’s “Self-managed superannuation funds: A statistical overview 2022-23” report showed compliance contraventions relating to administrative issues, operating standards and arm’s-length transactions have all increased slightly from the previous year.
Further, Miller linked this trend to a range of matters that have had renewed regulator focus over the past few years.
“What’s interesting [in the statistics] is that certain things, such as loans to members or the provision of financial assistance, still remain the number one breach from a compliance point of view and that’s, of course, quite problematic. But when you compare these statistics [to those of previous years], what you will see is the percentages of all of those breaches [as to the total amount of contraventions] have come down,” he told attendees of the latest SuperGuardian technical webinar.
“[However, breaches involving] administrative issues … have gone up, breaches of the operating standards have gone up and breaches of the arm’s-length rule have gone up.
“Those three [compliance matters] incorporate the hidden requirements that market valuations bring. So the separation of assets, the market valuation requirements, the arm’s-length transacting, because of the emphasis the regulator’s had on such issues … means these admin breaches are going up, these operating standard are going up and these arm’s length are going up.”
He acknowledged the increase in instances of non-compliance regarding these specific areas were only minor, but highlighted the consequences trustees may face with breaches of this nature.
“From a regulatory point of view, [such breaches can lead to] an enforceable undertaking [being issued], there can be a rectification direction given, there can be admin penalties and in the worst-case scenario [they can lead to trustee] disqualification,” he warned.
