The ATO’s additional powers to deal with breaches of the Superannuation Industry (Supervision) Act 1993 (SIS Act) by self-managed superannuation funds (SMSFs) is now law and will apply to breaches of the SIS Act from 1 July 2014.
These penalties will significantly increase the ATO’s ability to deal with non-compliance with options less extreme than making a SMSF non-compliant. From 1 July 2014, the ATO has the power to:
- issue a rectification direction;
- issue an education direction; and
- impose an administrative penalty of up to $10,200 for each breach personally by the offending trustee or director.
It is not clear how the administrative penalties will apply where the trustee is a company as the legislation imposes the penalties on the company or the directors. In some cases, there may be less penalties imposed where the trustee is a company as opposed to individuals, but this will not necessarily always be the case and depends on how the ATO administers the legislation.
Where you have clients with existing breaches of the SIS Act, immediate action should be taken to ensure that these breaches are rectified before 1 July 2014 as the administrative penalties can apply to continuing breaches.
For more information in relation to how the ATO’s further powers will apply, please see our recent bulletin or contact a member of our superannuation team.