Compliance set to play ‘sizeable role’ for SMSF sector this year

Mr Dunn noted that the ATO is set to release two Final Law Administration Practice Statements next month which relate to education directions and rectification directors.

The two practice statements will provide guidance on the relevant matters that will be considered by ATO staff when deciding whether to give a trustee or a director of a corporate trustee of an SMSF a written education director or a written rectification direction.

The ATO will also release its Final Law Administration Practice Statement on super benefits in breach of the rules early this year. This practice statement provides guidelines on how the Commissioner’s discretion may be applied where superannuation benefits are received in breach of legislative requirements.

It will also release a Final Tax Determination which will set out the Commissioner’s view on the income tax treatment of a superannuation benefit received by an individual otherwise than in accordance with the payment standards prescribed under the Superannuation Industry (Supervision) Act 1993 (SIS Act).

In addition to this, Mr Dunn said the ATO is also refining its SMSF registration process as it looks address issues such as fraudulent activity and cyber crime.

“All of this amounts to the fact that the ATO is raising the bar on how they deal with compliance. That means that trustees are equally going to have to raise that bar,” he warned.

With the ATO finalising these practice law administration statements and its tax determination, Mr Dunn said this means that where there’s been breaches such as illegal early access, the ATO will be applying the full effect of the law.

“So, we’re seeing a maturity of how the law will work and therefore as we work through the year, this focus on compliance will become a very common theme.”

In a conference in October last year, ATO assistant commissioner, SMSF risk and strategy, Justin Micale warned SMSF professionals and trustees that there would be an increase in trustee disqualifications associated with trustees illegally accessing their super.

This has already been reflected in the number of disqualified trustees this financial year with over 400 trustees disqualified in the first half of the 2022–23 financial year.

This still represents a 61 per cent increase in trustee disqualifications compared with the previous 2021–22 year with half the income year still left.