Penalty rate hike sparks corporate trustee push
The introduction of a bill to increase penalty units for Commonwealth penalties from $180 to $210 demonstrates why setting up a corporate trustee may be in the best interests of SMSF clients, according to one law firm.
The Crimes Amendment (Penalty Unit) Bill 2017 was introduced into Parliament last month and proposes increasing Commonwealth penalty units 16.7 per cent from $180 to $210, with effect from 1 July 2017, DBA Lawyers director Daniel Butler says.
Mr Butler said the bill will also delay the first automatic adjustment of the penalty unit to the consumer price index until 1 July 2020, with indexation to occur on 1 July every three years thereafter.
“In 2015, the Crimes Act was amended to introduce an indexation mechanism to automatically increase the value of the penalty unit every three years in line with CPI,” he said.
“Pursuant to these amendments, the first adjustment to CPI will occur on 1 July 2020, with indexation to take place on 1 July every three years thereafter.”
Mr Butler said contraventions of many super provisions usually amount to 60 penalty units, therefore the penalty for these contraventions will mean an increase from the current $10,800 to $12,600 from 1 July 2017.
“[SMSF trustees] have got to take stock because it again reinforces that if you’ve got a corporate trustee, you only have to pay one level of penalty,” he said.
“We’ve had admin penalties from mid-2014. People with the individual trustees are fooling themselves because the admin penalty has now gone up 17 per cent and you get [penalised] with the number of heads.”
“So if you’ve got two parents and two kids, you’re going to get whacked up four times and one of those penalties rather than being $10,800 will now be $12,600.”
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.