In a statement, Australian Superannuation and Compliance (ASC) said that currently, managing responsibility for compliance inside SMSFs is a “fuzzy area” since both advisers and trustees point at the other to claim responsibility.
“The trustee maintains it is the role of the adviser whilst the adviser believes it’s the function of the trustee,” ASC founder and director Ravi Subramaniam said.
“With hefty ATO tax penalties of up to 47 per cent plus the Medicare levy on the total value of the SMSF, it is an immensely important area that demands clarity and certainty for investors,” he said.
Mr Subramaniam said the current “stalemate” between advisers and trustees over managing SMSF compliance means the problem ends up with the administrator.
“Currently there is no requirement to disclose who is responsible for the SMSF compliance as ultimately it all falls into the lap of the trustees as per the regulations,” Mr Subramaniam said.
“But herein is the problem: Each SMSF trustee is different and there is no consistency in whom they use as their service providers, i.e. investment adviser, financial planner, accountant or administrator,” he said.
“SMSF administration and compliance is an area that demands many years of experience in order to provide this service and facility competently,” Mr Subramaniam added.
The ultimate responsibility is always the trustee, that’s been shown time and time again in judgements.
If the advisor is asked for and gives advice that causes the trustees to breach SISA, then that’s a negligence issue.
BTW, the Medicare Levy is not added to the tax rate applied to a non-complying fund. It’s a flat 45% + the 2% ‘temporary’ Budget Repair Levy. The Medicare Levy only applies to the taxation of excess contributions.
It’s a black & white issue in my opinion. No grey about it. The ultimate responsibility for compliance lies with the trustee. The trustee can get advice but that does not remove any personal responsibility. The adviser has a duty of care of course but is not responsible for the decisions of the trustee. I don’t see any grey here.