ATO warning to SMSFs: "Paying the price for non-compliance"

There are various courses of action available to the ATO when trustees of self-managed super funds ('SMSFs') have not complied with the super laws, including applying administrative penalties.

A number of factors determine the amount of the administrative penalty, including:

• the type of contravention;
• when it occurred; and
• the number of penalty units that apply.

For example, if an SMSF contravenes a provision in relation to borrowings during the 2021/22 financial year, the ATO may apply a penalty of 60 penalty units and, at $222 per unit for that year, this would result in the SMSF trustee having to pay $13,320. This could be even more if there are

multiple contraventions.

Note that the Government recently introduced a Bill to increase the value of a penalty unit for Commonwealth offences committed on or

after 1 January 2023 from $222 to $275.

The ATO imposed total administrative penalties of around $3.4 million on SMSF trustees last year for

contraventions such as trustees illegally accessing super benefits, loans, or financial

assistance given to members.

Also, just because a trustee receives an administrative penalty doesn’t mean the ATO won't undertake any other compliance action, such as issuing a notice of non-compliance or disqualifying the relevant entity as a trustee.

Other important updates discussed in this month's update include:

• ATO's record-keeping tips
• Input tax credits denied due to lodging BASs late
• Chef spending most of a year on cruise ships still a 'resident'
• Requesting stapled super fund details for new employees