An SMSF technical specialist and a legal expert have confirmed practitioners and trustees cannot expect the ATO to become involved or intervene when there is a dispute between fund members.
To this end, Accurium head of SMSF education Mark Ellem cited the statement on the ATO website, under QC 47220, stipulating the regulator’s position regarding member disputes. Here, the ATO stipulates: “We do not get involved in resolving disputes among members. Disagreements can be resolved through alternative dispute resolution techniques or in court, at the members’ own expense.”
“I think it’s very clear – [it doesn’t] want to get involved,” Ellem told attendees of a technical webinar held yesterday.
Business Depot director Neil Dallas affirmed this is the case in his experience with these types of matters.
“I have enough disputes with the tax office involving clients [and it certainly doesn’t] want to get involved between fund members or other interested parties if that dispute involves SMSFs. Yes [it is] the regulator, but [it is] not there as the arbitrator or the mediator of disputes,” Dallas noted.
“[It] just wants to step back and let the members and others sort it out.”
He acknowledged though the ATO will play a role in member disputes in certain circumstances.
“If the dispute causes a compliance issue, then [it] will step in and sometimes it’s [a compliance matter] that causes the dispute or exacerbates the dispute,” he said.
“So in these situations [the members] already have a problem [often arguing over a course of action] and the ATO is on the fund’s back and then it all blows up between the members and the trustees.”
Ellem also warned practitioners of another safety net to which trustees do not have access in member disagreements.
“In addition to [the ATO’s position], just [a reminder] there is no government assistance [with regard to] compensation for members of SMSFs. I call it the buyer-beware [element],” he indicated.
