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ARTICLE · 17 APRIL 2014

SMSFs beware - administrative penalties are now law!

Cooper Grace Ward
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The new penalties significantly increase the ATO's ability to deal with SMSF non-compliance, with less extreme options.

AustraliaFinance and Banking
Clinton Jackson
Clinton Jackson
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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.

The new penalties will significantly increase the ATO's ability to deal with non-compliance with options less extreme than making the fund non-complying. 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 payable by the offending trustee or director.

Administrative penalty

SMSF trustees will now be liable for administrative penalties for breaches of specific sections of the SIS Act. These penalties, ranging from $850 to $10,200, will be automatically imposed once a breach has been established. For example:

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