In light of recent ATO statements and communications, trustees are being warned that poor compliance practices in their own personal and business affairs could impact how the ATO views and scrutinises their SMSF.
Late last week, Kasey MacFarlane, ATO assistant commissioner of the SMSF segment, superannuation, said that if the regulator finds an aggressive taxation approach coupled with a regulatory breach it will “definitely look to disqualify the trustee”.
“The sole purpose of an SMSF is to provide retirement benefits for members. Those people looking to ‘play the system’ and receive a present-day tax benefit in their personal or business affairs are on notice: regulatory and income tax breaches related to the same transaction or arrangement will no longer be treated in isolation,” she said.
Speaking to SMSF Adviser, AMP SMSF’s Peter Burgess said these comments, and AMP SMSF’s own discussions with the ATO, suggest they intend to be “much tougher” on SMSF trustees who, in their own personal or business tax affairs, demonstrate poor compliance practices.
“Such practices could see their SMSF classified as high risk and targeted for an audit and scrutiny under the new SMSF administration penalty regime. We need to remember that under the current ATO compliance approach, only SMSFs which are audited by the ATO may incur an administrative penalty,” Mr Burgess said.
“If a breach is found, the ATO has no discretion but to apply the penalty, although the penalty, in some situations, may be reduced or remitted. It could also lead to the SMSF trustees being disqualified and their SMSF being wound up by the ATO.
“In the past, the ATO has not always been so willing or able to look at the offender’s SMSF affairs, but with enhanced data capture techniques now in place, it appears times are changing. So it’s now more important than ever that SMSF trustees remain diligent with their own personal and business tax affairs.”
In her address, Ms MacFarlane stressed that SMSF trustees and their advisers who are concerned about a potential contravention or by non-compliance are encouraged to take steps to rectify any issues “at the earliest possible stage”.
“Taking early and immediate steps to rectify issues not only serves to limit or prevent financial detriment to a members’ retirement savings, but is also likely to lead to a more favourable outcome in terms of any enforcement action by the ATO,” she said.
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