Concerns have arisen in the SMSF sector over how the ATO is applying administrative penalties for certain breaches of the Superannuation Industry (Supervision) (SIS) Act, with a view the regulator’s approach has significantly changed recently.
“There have been some cases recently where a fund has copped not just a single administrative penalty, but a number of penalties for the same breach,” SuperConcepts technical services and education general manager Peter Burgess told delegates at the recent SMSF Professionals Day 2019, co-hosted by smstrusteenews’ sister publication selfmanagedsuper and SuperConcepts.
“So it could be the same breach of a provision for a number of years, but we always thought you cop only one admin penalty. It appears that now trustees are incurring administrative penalties for every breach.
“So there seems to be a change in the way the ATO is now applying administration penalties.”
He noted in a recent case one SMSF incurred significant administrative penalties for a repeated breach of the same SIS Act provision that happened over a number of years.
As such, he said the sector is eagerly awaiting clarification from the ATO later in the year by way of a Law Administration Practice Statement as to how these penalties are issued.
“We are looking forward to seeing this statement being released so we can see how do they actually apply these admin penalties,” he said.
The statement is expected to be released in September.
The ATO introduced administration penalties for certain breaches of the SIS Act on 1 July 2014. These include non-adherence to provisions such as those governing loans to members and relatives, in-house assets, operating standards, and the duty to keep minutes of meetings.