ATO and compliance with super laws

When self-managed superannuation fund (SMSF) trustees have not complied with super laws, the ATO has several courses of action in order to deal with the trustees.

Education direction

When a SMSF trustee has been found to have contravened super laws, the ATO may provide written direction where the trustee must undertake education. The trustee must provide evidence that they have completed this education and sign a declaration stating that they understand their obligations.

Enforceable undertaking

A SMSF trustee may initiate a written undertaking to rectify a contravention. Upon taking into account the compliance history of the trustee, the nature of the contravention and the strategies to prevent the contravention from recurring, the ATO will determine if they accept the undertaking.

Rectification direction

The ATO may give a trustee a written direction to rectify a contravention of the super laws.

Administrative penalties

Individual trustees and directors of corporate trustees are personally liable to pay an administrative penalty for breaches of the super laws. Penalties cannot be paid or reimbursed from the assets of the fund.

Disqualification of a trustee

An individual may be disqualified by the ATO from acting as a trustee or director of a corporate trustee if they have contravened super laws or if the ATO is concerned about the individual’s actions or suitability to be a trustee.

Civil and criminal penalties

Penalties may apply where an SMSF trustee has contravened certain provisions of the super laws.

Notice of non-compliance

Serious contraventions of the super laws may result in an SMSF being issued with a notice of non-compliance. In this case, the fund remains non-compliant until it receives a notice of compliance.

Allowing the SMSF to be wound up

Following a contravention, the trustee may decide to wind up the SMSF and roll over any remaining benefits to an APRA regulated fund. However, the ATO may continue to issue the SMSF with a notice of non-compliance or apply other compliance treatments.

Freezing the SMSF’s assets

The ATO may give a trustee or investment manager a notice to freeze an SMSF’s assets where it appears that conduct by the trustees or investment manager is likely to adversely affect the interests of the beneficiaries to a significant extent. This is particularly important when the preservation of benefits is at risk.

Contact us if you have any questions

If you have any concerns about your SMSF, please don’t hesitate to contact us.  

General advice warning: The advice provided is general advice only. In preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

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