The Bill drafted to give the Australian Taxation Office (ATO) more flexibility and new penalty powers when dealing with non-compliance among SMSFs has lapsed, meaning the measures did not come into effect on July 1, as anticipated.
The Superannuation Legislation Amendment (Reducing Illegal Early Release and Other Measures) Bill 2012 was originally introduced to the House of Representatives on 29 November 2012 and was last heard on February 11 this year.
The Bill proposed that the ATO have power to impose administration penalties on trustees for certain SIS Act breaches. In addition, it proposed the ATO have power to direct SMSF trustees to fix a breach and direct trustees to undergo education in the event of a breach.
AMP’s head of policy and technical, Peter Burgess, told SMSF Adviser the changes, initially raised in the Cooper Review, were supported by AMP.
Burgess noted that under current law there is an ‘all or nothing’ approach, meaning where this is a serious breach the fund will be declared non-compliant. He added that while the ATO does have the power to impose monetary penalties, this currently requires a court action.
“The idea behind these new penalties was to give the ATO an easier way to take action against trustees that doesn’t require court action,” Mr Burgess said. “The ATO’s powers at the moment [are] not ideal... we support these particular changes because it will strengthen the sector.
“It makes sense to us that the ATO has more powers to work with trustees.”
This Bill also proposed harsher penalties be imposed on promoters of illegal early release schemes and would have made rollovers to an SMSF a designated service under the anti-money laundering laws.
Assuming the Bill is heard and passed during the next session of parliament, which begins on August 20, the new regime's start date will become the key question.
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