SMSF compliance breaches rising, says lawyer
The number of SMSF compliance breaches is increasing, according to commercial law firm Gadens Lawyers, with issues stemming from poor advice and from members lacking experience.
Kathleen Conroy, partner at Gadens, told SMSF Adviser that in the past 12 months she has seen an increase in breaches related to accessing funds, including incidences in which members of an SMSF are unaware of the implications of withdrawals.
Ms Conroy also said she has seen an increased incidence of incorrect borrowing structures related to limited recourse borrowing, adding that many SMSFs are being opened for the purpose of borrowing.
“The thing with a breach is that it tends to multiply; [when] you do something else to try and fix it, to get around it, you’ve committed another breach,” she said.
Ms Conroy added that the Australian Taxation Office has indicated its compliance team has grown over the past 18 months, which could further suggest a spike in compliance breaches.
Reasons for the increase include advice being offered by practitioners who “aren’t properly skilled in the area”, including lawyers, accountants and financial advisers, she said.
“I see [bad advice] all the time... you’re never excused from it. If you’re the trustee, it’s still your problem.”