“We also strongly object to the reference to an ‘accredited SMSF adviser’ as a proxy for expected knowledge. This terminology indirectly targets our professional designation and should not appear in ATO administrative guidance,” it stated.

It recommended that the reference to “accredited SMSF adviser” be removed and a minimum materiality threshold be introduced to ensure directions are reserved for matters where mandated education is genuinely warranted. It also suggested that for minor or inadvertent breaches, voluntary education may be encouraged instead of a direction.

Additionally, the submission stated that the draft PSLA suggests the ATO may form a reasonable belief of a contravention based on an Auditor Contravention Report but argued that an ACR reflects the auditor’s assessment at a point in time and may not capture context, such as genuine grey-area technical interpretation.

It recommended that before issuing an education direction based on an ACR, the ATO should undertake at least a light-touch review or trustee engagement to confirm facts and ensure procedural fairness, avoiding premature action.

Regarding the issue of closing the gap where former trustees re-enter the system, the submission said while the SMSFA agrees with the ATO’s position that a direction cannot be issued to a person who is no longer a trustee/director at the time the ATO decides to act, this may allow a former trustee involved in a contravention to resign, avoid the education requirement, and later re-enter the system by establishing or joining another SMSF.

It recommended that a system safeguard be implemented to identify individuals linked to prior contraventions if they seek to re-enter the SMSF system.

“This would support appropriate risk profiling of new trustees, helping maintain the integrity of the SMSF sector,” it stated.

It also addressed the flexibility to issue a second education direction where appropriate, stating that the draft PSLA notes that an education direction may not be appropriate if one has previously been issued.

“While we understand the intent to avoid over-reliance, a blanket position could remove a constructive compliance option. Several years may have elapsed since a prior direction, during which regulatory settings may have changed significantly alternatively a subsequent breach may be minor or unrelated to the original issue,” the submission continued.

“[We recommend] the ATO retains discretion to issue a second education direction where it is the fair, proportionate and educative response, rather than defaulting to stronger compliance action.”

The SMSFA also stated the ATO should avoid setting a default period capable of being read as the standard expectation.

“The draft states 28 days will ‘normally’ be reasonable; this should be positioned as a minimum, not the norm, noting peak compliance periods and personal circumstances,” it stated.

“[We recommend] that the ATO clarify that 28 days is a minimum and adopt a more flexible standard range of four to eight weeks, with a simple, accessible variation/extension process.”

It also made recommendations around minimum standards and transparency for approved courses, stating that anecdotal feedback and research into trustee behaviour indicate historically low engagement with ATO-delivered education products, with trustees preferring independent, sector-led learning.

“When the law was introduced, it anticipated that ‘other entities’ could develop and deliver approved courses; however, this pathway now appears unavailable or unclear,” the submission stated.

“[We recommend] that option for ‘other entities’ to provide approved courses be restored and supported by published quality benchmarks and a transparent approval process to ensure independence, consistent learning outcomes and high-quality trustee education.”