This includes breaches that may be inadvertent. This new legislation received Royal Assent on 18 March 2014 and will make new penalties available to the ATO for breaches that occur on or after 1 July 2014.
The legislation will also apply to contraventions that were made prior to 1 July 2014.
Examples of breaches of law include:
• loan to a member of the fund
• failure to prepare accounts in a year of income
• failure to keep minutes
The new penalties are designed to make it easier for the ATO to impose a monetary penalty on trustees who breach the law. The penalties will range from $850 to $10,200 depending on the type of breach that has occurred.
This monetary penalty will apply to the trustees personally and cannot be paid using the super fund’s assets.
The ATO has stated that if trustees are making progress in resolving the contravention by 1 July 2014 it will consider these circumstances in any request to remit any imposed administrative penalties.
These new penalties represent a significant change for SMSF trustees. The ATO’s ability to issue monetary penalties in the past has been restricted due to the severity of penalties available to them.
It is expected that the ATO will adopt a practice of imposing administrative penalties and require trustees to demonstrate that the penalty was unwarranted.
These changes have increased the risk that trustees will be exposed to financial penalties if a breach of the law occurs, so it is important that trustees ensure that they are vigilant in meeting all compliance requirements.
If you would like to discuss these chanes with our SMSF team then please do not hesitate to contact this office.