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Admin penalties fail to reduce disqualifications: CFS

Admin penalties fail to reduce disqualifications: CFS

Miranda Brownlee
03 November 2015 — 2 minute read

Recent data suggests that the introduction of the ATO new penalty regime last year has done little to reduce SMSF trustee disqualifications, says Colonial First State (CFS).

CFS executive manager Craig Day told SMSF Adviser that despite the ATO’s ability to issue administrative penalties, rectification directions or education directions, the number of individual SMSF trustee disqualifications increased again for the 2014-15 financial year. 

SMSF Adviser reported back in July that the ATO had disqualified over 600 trustees, with the official figure from the ATO showing 663 individual SMSF trustee disqualifications. 

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The penalty regime powers were first introduced in March last year and were designed to give the ATO alternative options to simply making the SMSF a non-complying fund, disqualifying the trustee, applying to the court for a civil penalty or requiring the trustee to enter an enforceable undertaking.  

Mr Day said that in the past couple of years the rate of individual SMSF trustee disqualifications has steadily been rising, with the number of disqualifications being 295 in 2011-12, 440 in 2012-13, 585 in 2013-14 and then 663 in the past financial year.

“Even with the new administrative powers, the ATO still seem to be very much favouring disqualifying trustees,” he said.

“So even though they’ve introduced the new administrative penalties, it doesn’t seem to have impacted the number of trustees that they’ve disqualified.”

Mr Day said while 663 is obviously still a very small number, given there are now more than one million SMSF trustees, there has been a pattern within which the number of disqualifications has consistently increased.

“The introduction of the new administrative penalties, rectification directions and education directions hasn’t tempered their willingness to disqualify trustees,” he said.

Mr Day did point out, however, it was difficult to say whether this could be partly due to the greater surveillance of auditors or the ATO applying tougher tests for trustees. 

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CFS executive manager Craig Day told SMSF Adviser that despite the ATO’s ability to issue administrative penalties, rectification directions or education directions, the number of individual SMSF trustee disqualifications increased again for the 2014/15 financial year.

SMSF Adviser reported back in July that the ATO had disqualified approximately 660 trustees, with the official figure from the ATO showing 663 individual SMSF trustee disqualifications.

https://www.smsfadviseronline.com.au/news/13229-ato-outlines-smsf-penalties-disqualifications-for-2014-15

The penalty regime powers were first introduced in March last year and were designed to give the ATO alternative options to simply making the SMSF a non-complying fund, disqualifying the trustee, applying to the court for a civil penalty  or requiring the trustee to enter an enforceable undertaking.

https://www.smsfadviseronline.com.au/news/12121-new-ato-penalty-regime-welcomed

Mr Day said in the past couple of years the rate of individual SMSF trustee disqualifications has steadily been rising with the number of disqualifications 295 in 2011/12, 440 in 2012/13, 585 in 2013/14 and then 663 for the last financial year.

“Even with the new administrative powers, the ATO still seem to be very much favouring disqualifying trustees,” he said.

“So even though they’ve introduced the new administrative penalties, it doesn’t seem to have impacted the number of trustees that they’ve disqualified.”

Mr Day said while 663 is obviously still a very small number, given there are now more than one million SMSF trustees, there has been a pattern where the number of disqualifications has consistently increased.

“The introduction of the new administrative penalties, rectification directions and education directions hasn’t tempered their willingness to disqualify trustees,” he said.

Mr Day did say, however, it was difficult to say whether this could be partly due to greater surveillance of auditors or the ATO applying tougher tests on trustees.

 

Miranda Brownlee

Miranda Brownlee

 

Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.

Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years. 

Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.

You can email Miranda on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Admin penalties fail to reduce disqualifications: CFS
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