Review funds now or be penalised later
Commencing from 1 July 2014, the ATO will have a broad range of graduated penalties and administrative directions at its disposal to address any non-compliance of the superannuation laws - in addition to its existing powers.
The ATO has rarely used its existing range of powers except in cases of significant non‑compliance because the potential consequences are considered “disproportionately high”. This has meant that a number of SMSF trustees have effectively avoided sanction for contravening the law simply by rectifying the conduct when it is detected. This has not provided sufficient encouragement for voluntary compliance.
However, the new rules introduce a system of administrative directions and penalties for contraventions relating to SMSFs that occur on or after 1 July 2014, including:
· providing the ATO with powers to give rectification directions and education directions; and
· imposing administrative penalties for certain contraventions of the law
Penalties imposed under the new administrative penalty regime are payable personally by the person who has committed the breach and therefore must not be paid or reimbursed from assets of the SMSF.
It is important to review all SMSFs prior to 30 June this year to minimise the risk of attracting these penalties.