An accounting and advisory firm has suggested the new penalty power regime could see the ATO fining SMSF trustees up to $100 million per year.
According to the firm William Buck, the new ATO penalty powers coming into play on 1 July 2014 have the potential to “significantly weaken the value of many taxpayers’ retirement nest eggs”.
Of the 18,000 SMSF contraventions lodged with the ATO in the last financial year, approximately 50 per cent could have incurred penalties based on the proposed new super laws, William Buck said in a statement.
The maximum penalty charged by the ATO will be $10,200, however this is only based on the fund having a corporate trustee. SMSFs with individual trustees could receive multiple fines for the one contravention, the statement also said.
William Buck director Anna Carrabs said investors need to understand the full responsibilities they are taking on once they decide to establish a SMSF and become a trustee.
“The do-it-yourself label associated with SMSFs lures investors into a false sense of security due to the perception that it is easy to manage. This is far from the case,” she said.
“It is the trustee’s responsibility to understand what obligations are required to comply with the ATO’s super laws.”
“If a trustee does not have the skillset, independent advice needs to be obtained to ensure penalty fees are not incurred,” she added.
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