ATO & Superannuation

Self Managed Superannuation Funds Under the Microscope

In Australia, Self Managed Superannuation Funds (SMSF) account for 31% of the total superannuation assets with nearly one million (8% of total super members) members. The ATO has encountered some common problems in its audits in previous years including:

  • Loans and borrowings;
  • In-house assets;
  • Not investing at arm’s length;
  • Acquisitions from related parties;
  • Lack of separation of assets;
  • Sole purpose breaches.

The ATO will be reviewing every fund reported to it by approved SMSF auditors and last year 150 funds were declared non-compliant and 440 people were disqualified from being a trustee.

Penalties for SMSF Trustees

The Government has approved administrative penalties applicable from 1st July 2014 to breaches of the superannuation laws, with particular impact on trustees of SMSFs who will be personally liable for penalties ranging from $850 up to $10,200 depending on the contravention.  The fund cannot pay the penalty as the trustee is personally liable. Existing   arrangements which contravene super law will also come under the new penalty regime so trustees need to rectify any contraventions as soon as possible to avoid the penalties. An example would be a loan to a member or relative which   occurred before and still exists after the 1st July, 2014. Each individual trustee in this case would incur and be personally liable for a $10,200 penalty. Such a loan would need to be repaid to the fund as soon as possible with commercial interest.

Super Obligations Industries at High Risk

Employers in the following industries have been identified by the ATO as having a higher risk of not meeting their superannuation obligations:

  • Beauty Industry and Hairdressing
  • Clothing Retailers
  • Management Advice and Consulting.

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IMPORTANT DISCLAIMER:This newsletter is issued as a guide to clients and for their private information. This newsletter does not constitute advice. Clients should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of these areas.