ATO outlines approach on trustee disqualifications
The ATO has issued a reminder to SMSF trustees outlining the circumstances in which it will disqualify a trustee and the consequences of this action.
In a recent website update, the ATO warned SMSF trustees that one of the actions it can take as regulator is to disqualify individuals from being an SMSF trustee where they fail to comply with the super law.
“Under the super law, we can disqualify you from being a SMSF trustee or director of a corporate trustee if you have contravened the rules, and disqualifying you is the appropriate action taking into account the number, nature, and seriousness of the contraventions,” the ATO said.
The ATO also said it will look to disqualify individuals from being an SMSF trustee where it considers that an individual is not a 'fit and proper' person to be a trustee or director of the corporate trustee, having regard to their personal character and circumstances.
“We will generally look to disqualify you if we are concerned that allowing you to remain a trustee would present a future compliance risk or risk to retirement savings," the ATO stated.
“This includes situations where you have shown deliberate and blatant disregard for the super law, the contravention can't be rectified, and you have misused your SMSF to take advantage of the low super tax rates.”
The ATO noted that there may be other reasons why a person is disqualified from being a trustee under the super law, such as where they have been convicted of an offence involving dishonesty or are insolvent under administration.
“Disqualification is a decision we do not take lightly, and only after considering all other enforcement actions,” the ATO noted.
“We prefer to help trustees rectify contraventions and comply with the law, and keep the fund in the super system. However, sometimes we need to take a tougher approach.”
The ATO warned that being disqualified as trustee can have other financial and professional consequences.
“On our website we keep a register of individuals we have disqualified from being a trustee since 2012 and update it on a quarterly basis,” it stated.
“The disqualified trustees register is publicly available, and regularly checked by SMSF professionals, including SMSF auditors. It may also be accessed by your employer and financial institutions.”
The ATO recently reported that as at 30 March this year it had disqualified 170 SMSF trustees during the 2021–22 financial year, with 83 disqualified in the March quarter alone.
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
