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ATO, Compliance & Regulation

Trustees can’t rely on TBAR amnesty

TBAR penalties

The ATO’s position to date not to impose penalties for the late lodgement of transfer balance account reports cannot be expected to last.

A technical specialist has acknowledged the ATO is yet to hand down any penalties for the late lodgement of transfer balance account reports (TBAR), but has warned SMSF trustees not to rely on the regulator’s lenient enforcement approach in the future.

“While penalties [for late TBAR lodgement] are able to be levied, I’m not aware of the ATO actually issuing penalties at the moment. But I think we need to be very conscious that you need to be making a genuine attempt to comply,” Heffron head of SMSF technical and education services Lyn Formica said.

“When I say genuine attempts to comply, [that means] you’re putting in place processes to make sure that you can lodge TBARs on time in the future.

“But otherwise if you’re just ignoring the TBAR concept altogether, I think there is a risk in the future you will suffer the consequences.”

Formica pointed out the penalties for failing to comply with TBAR requirements can be severe should the ATO decide to implement them.

“The penalties are $222 for each 28 days that [the TBAR] is late and that’s up to a maximum of five penalty units. So [that amounts to] $1110 per document. [That means] in any situation where we’ve got a death of a member, we might have multiple TBARs that are required,” she advised.

Heffron senior SMSF technical specialist Annie Dawson recognised in certain situations, such as when an SMSF member with a pension dies, the ATO is likely to exercise some leniency in its compliance enforcement.

“In a lot of those situations you’d have some good reasons for why the TBAR has been lodged late and would hopefully get a little bit of [tolerance] there,” Dawson said.

According to Formica, trustees can strengthen the possibility of avoiding compliance penalties if a pattern of behaviour can be established.

“[The ATO will be] looking across the [fund’s history to determine] is it just this one that’s late or are all of your TBARs lodged late,” she said.

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