SMSF trustees face stronger penalties from 1 July 2014
From 1 July 2014, SMSF trustees face stronger penalties imposed by the Australian Taxation Office if they do not attend to what are seemingly simple administrative housekeeping requirements such as failing to keep proper records or being late in lodging forms or advising changes.
The penalties range from $850 for not attending to some administration matters, $1,700 for failing to keep minutes and records for prescribed times, $3,400 if the trustees do not comply with their Fund’s prescribed operating standards or do not advise the ATO if the Fund ceases being a SMSF increasing to $10,200 for breaches involving in house assets, loaning monies to members or related parties or breaking the rules prohibiting the Fund from borrowing.
The penalties apply to each trustee or the corporate trustee and cannot be reimbursed by their Fund.
A summary of the penalty regime and why penalties may be imposed are as follows:
| Penalties | SISA | Why |
|---|---|---|
| $10,200 | 65(1) | Lending to members or providing financial assistance |
| 67(1) | Breaking borrowing rules (except exemptions) | |
| 84(1) | Breaking In House Asset rules | |
| 106(1) | Not notifying ATO of a significant financial impact event | |
| $3,400 | 106A(1) | Not telling the ATO if the fund ceases to be an SMSF |
| 34(1) | Not complying with the Fund’s prescribed operating standards | |
| $1,700 | 35B | Not retaining P&L and BS for at least 5 yrs |
| 103(1) | Not keeping minutes of group of individual trustees for 10 yrs | |
| 103(2) | Not keeping minutes of one individual or corp trustee for 10 yrs | |
| 103(2A) | Not keeping s71E election for at least 10 yrs | |
| 104(1) | Not keeping records of trustee changes for at least 10 yrs | |
| 104A(2) | SMSF Trustee to sign declaration in approved form within 21 days | |
| 105(1) | Not keeping member reports for at least 10 yrs | |
| $850 | 124(1) | Investment Managers must be appointed in writing |
| 160(4) | Trustee cannot refuse free of charge information | |
| 254(1) | Trustee must give certain information to ATO on establishment | |
| 347A(5) | Trustee must respond to regulatory surveys as required |
Author
David Burrows
Director
David's wealth of business experience and a clear vision for the future has enabled Baumgartner Super to establish itself as a market leader.
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