An senior SMSF stakeholder has claimed there is a discrepancy between the leniency being shown by the ATO to trustees who engage in deliberate breaches of their obligations and the law, and the treatment of auditors.
Tactical Super director Deanne Firth said a review of letters sent to trustees by the ATO in response to auditor contravention reports (ACR) highlighted the apparent gap and contrast with official messaging around trustee compliance.
Speaking at the Auditors Institute Auditors Day 2025 in Melbourne last week, Firth presented some anonymised samples from letters that were attached to audit files where all the actions subject to the ACR were deliberate breaches of super law.
In one example, a trustee loaned a significant amount of money to their de-facto partner, but claimed the relationship started after the loan commenced, and after five years of ACRs the trustee and their fund were audited by the ATO as the loan was not repaid.
“The administrative penalty on that breach was initially $53,280, but the ATO remitted it to $640,” Firth said.
“So this person got quite a long-term loan and favourable interest rates, and I was quite frustrated when I saw that one.
“Another case where it seems the ATO is showing more leniency on trustees, but not on auditors, was a deliberate scheme over five years that had false loan documentation, related-party transactions, for a high six-figure amount and the interest rate was ridiculously low.
“The trustees pretended they had a loan agreement, but the money went directly from the super fund into their business where they used it to complete a development.
“The money still hadn’t been paid back at the time the ATO did the audit and the administrative penalties should have been $1.1 million, and then the ATO remitted it down to $5295.
“It’s disappointing when people have obviously done the wrong thing, they’re not being held accountable, yet we are held to a higher or consistent standard.”
She noted this approach also undermined the purpose of the trustee declaration and any warnings provided by SMSF practitioners.
“The whole reason for that declaration was so they could be held accountable and couldn’t say they didn’t know because they signed a declaration that says they know what they’re doing and it’s witnessed, and yet they’re still not being held fully accountable,” she added.
“It’s also frustrating when you’re telling people year after year they are doing the wrong thing and the ATO is going to find you and penalise you, and when they finally get this scary audit, nothing really happens.”
