ATO outlines ‘important’ reminders for trustee clients
In light of concerns about trustees' engagement with their SMSF, the ATO has encouraged practitioners to offer “important” reminders to their trustee clients.
Speaking at the SPAA State Technical Conference last week, the ATO’s assistant commissioner for SMSFs, Matthew Bambrick, said trustee awareness is an ongoing concern for the ATO.
“We’re always worried about trustee awareness because it’s the trustee who is responsible for the fund. They might use advisers, they might be very good advisers, but it’s always the trustee that has responsibility at the end of the day,” Mr Bambrick said.
Speaking to SMSF Adviser, Mr Bambrick said the ATO encourages SMSF practitioners to make sure that trustees understand that they each bear ultimate responsibility for the fund.
Practitioners can do this by highlighting that penalties which apply for contraventions apply per trustee, Mr Bambrick said, regardless of whether the trustee was actively managing the fund or not, and regardless of whether a contravention was due to an action of an adviser or not.
SMSF practitioners should also question their clients on what they would do if “something goes wrong” with the fund.
“For example, if there are two trustees and one does everything, what happens if that one becomes unwell and is not able to manage the fund? This can lead to serious financial consequences, such as missing a pension payment, failing to make the minimum pension, losing the tax exemption for income supporting a pension, with what can be a significant tax consequence,” Mr Bambrick said.
Providing information on “bad examples” linked to trustee disengagement may also be useful, Mr Bambrick suggested.
“Like the matter where one trustee ran off with all the funds, left the country and left the other trustee with all the liabilities, running into hundreds of thousands of dollars,” he said.