The SMSF industry’s support for a government measure to introduce more flexible penalties for trustees who breach the rules demonstrates the integrity of the sector, says AMP SMSF policy and technical head Peter Burgess.
“Under the current rules, where the Australian Taxation Office imposes penalties on trustees, it can have severe implications for the fund,” Burgess told the 10th SMSF Professionals’ Association of Australia national conference in Brisbane, which kicked off yesterday.
“In these circumstances it is understandable why the ATO only imposes penalties in the most severe circumstances.
“The proposed new penalties, introduced into Parliament last year but now being re-introduced, will enable the ATO to impose penalties more appropriate to the seriousness of the offence.”
But Burgess said there is more work that could be done as one of the “most severe and inflexible” SMSF penalties still remains – which apply if an SMSF fail the residency rules.
“The loss of compliance status in these circumstances is significant particularly when you consider the active member test is a difficult test to understand and apply and many breaches are inadvertent.
“Hopefully during the financial sector review this year the SMSF industry will have the opportunity to push for a more flexible penalty regime in this area.”
Although the level of professionalism in the industry is on the rise, in some micro areas there is still room for improvement, said Burgess.
“As a result of the ATO’S final ruling on when a pension begins and ceases, a more disciplined approach to pensions, particularly in relation to when a pension starts and when a partial commutation request is received, is needed.
“In some instances, the industry may have been a bit blasé about pension start dates and clients making partial communication elections. However, going forward, and particularly in light of the pension ruling, we can expect the ATO to be taking a closely look at these issues.”
The conference is being held in Brisbane at the Convention and Exhibition Centre from 19 to 21 February.
It will have an emphasis on technology to highlight the substantial changes required for SMSF
over the next two years, including employer contributions and Super Stream.
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