SMSF trustees take note: The new penalty regime is now in force

We reported about the changes to the penalties able to be handed down to self-managed superannuation fund (SMSF) trustees some months ago, but just as a timely reminder – a new penalty regime for SMSFs is now in effect and pertains to the activities of all SMSF trustees.

With its new regulatory powers, the Tax Office will be able to issue trustees with a direction to rectify contraventions, enforce mandatory education when there is non-compliance with superannuation law and impose administrative penalties that will be payable by the trustee, not out of the assets of the fund.

The last mandated power of the Tax Office has attracted the most attention with SMSF trustees now liable to fines of up to $10,200 for failing to adhere to superannuation law. To refresh your memory, below are the breaches, their corresponding penalty units, and the amounts SMSF trustees would be liable for.

Consult this office to ensure you are on the right side of the law startng from July 1 this year.

Breach Penalty units Amounts
Failure to appoint an investment manager in writing when one is appointed 5 $850
Failure to provide the Tax Office with information on the approved form within the prescribed period upon establishing a fund 5 $850
Failure to complete a form with requested information provided by the Tax Office as part of its statistical program 5 $850
Failure to comply with Tax Office education directive 10 $1,700
Failure to have financial statements prepared, signed and retained for at least five years 10 $1,700
Failure to keep trustee minutes for at least 10 years 10 $1,700
Failure to keep records of change of trustees for at least 10 years 10 $1,700
Failure to sign trustee declaration within 21 days of appointment and keeping for at least 10 years 10 $1,700
Failure to keep member reports for 10 years 10 $1,700
Failure to notify the Tax Office of a change of SMSF status e.g. fund ceasing to be an SMSF 20 $3,400
Failure to comply with operating standards 20 $3,400
Lending or providing financial assistance to fund members or relatives 60 $10,200
Borrowing, except as permitted e.g. limited recourse borrowing arrangement 60 $10,200
Contravention of in-house asset rules 60 $10,200
Failure to notify Tax Office of an event that has significant adverse effects on the fund’s financial position 60 $10,200