A leading law firm has advised proactive action within an SMSF and communication with the Australian Taxation Office (ATO) are the most effective means of dealing with a fund contravention.
“What the trustee needs is a plan to identify all aspects of the contravention, consider appropriate courses of action and take those steps to address the breaches,” Townsends Business and Corporate Lawyers said.
“Notification to the ATO of how you intend to proceed is critical.”
Most importantly, the legal experts recommended trustees consider carefully the best way in which to communicate with the ATO.
“Don’t talk to the ATO if you’ve got an accountant or financial adviser who can do so for you,” the law firm suggested.
“Don’t be like the client who told the ATO officer he had no idea about his super fund because his wife handled all that and then suddenly found himself disqualified as a trustee and their super fund removed from Super Fund Lookup.”
Statistics quoted by Townsends revealed there were 11,000 auditor contravention reports lodged for the 2014 financial year, all of which would be assessed by the regulator.
Upon review, the ATO will rate the contravention as either high, medium or low risk, and advise on the commensurate action to be taken, the most severe of which would be a comprehensive audit of the SMSF.
“The ATO has made it clear that super fund trustees identifying and actively addressing contraventions will be viewed favourably,” Townsends said.
“Breaches can be managed and the effect minimised in many different ways, but it is important that you act quickly.
“The worst thing to do is sit on the issue and hope it goes away.”