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SMSFs urged to act on compliance issues ahead of tougher penalties

SMSFs with outstanding compliance issues should consider making a voluntary disclosure while the ATO still has a more flexible approach in place and before they implement tougher admin penalties, says a law firm.

   

Recently, the ATO’s acting assistant commissioner for superannuation, Steve Keating, outlined the ATO’s current approach to dealing with SMSFs facing compliance issues and making voluntary disclosures, said Shaun Backhaus from DBA Lawyers.

“The ATO has recognised that many Australians are experiencing financial hardship as a result of the COVID-19 pandemic, and therefore it is not pursuing its usual audit program,” Mr Backhaus said.

“For the time being, the ATO is primarily engaging with and resolving issues for those SMSF trustees who have initiated contact with them, mainly through the ATO’s early engagement and voluntary disclosure program.”

Mr Backhaus said, typically, a voluntary disclosure will involve providing all relevant facts, supporting documentation and a rectification proposal or proposed enforceable undertaking to the ATO.

At the moment, the ATO is seeking to resolve issues while minimising the financial sanctions and penalties that might otherwise be applied during these difficult times, he noted.

“This more flexible approach has been brought about as a result of the difficult environment we all face with the COVID-19 pandemic,” he said.

With the ATO planning to undertake a tougher approach on administrative penalties once it issues its law administration practice statement (PS LA), SMSFs who have compliance issues may want to use the ATO’s voluntary disclosure service sooner rather than later,” Mr Backhaus stressed.

“The ATO has recently reviewed the application of its administrative penalties under s 166 of the Superannuation Industry (Supervision) Act 1993 (Cth) which highlighted that its staff have been too lenient in remitting these penalties.

“The ATO wants to rebalance its handling of imposing these penalties with a firmer approach.

“There is no date on when this flexible ATO approach will end, but we suspect that this will depend on when the PS LA issues and how many contraventions arise as a result of COVID-19.”

Mr Backhaus said it’s likely that, in the current environment, there are a considerable number of SMSFs with contraventions as families and businesses focus on paying for immediate necessities, rather than complying with the super rules.

“These financial pressures do not, however, provide any excuse or defence for contravening the super rules, and advisers in particular should be proactive in alerting clients that illegal early access to super benefits will still be treated seriously,” he warned.

“Sanctions that may apply to illegal early access could, for instance, include hefty tax and administrative penalties, non-compliance, disqualified status and a range of other penalties.”

He also pointed out that the ATO’s more flexible approach is only applicable to SMSF trustees that make a voluntary disclosure before an ATO review or audit is commenced.

“A different treatment applies if any contraventions arise from any ATO review or audit activity,” he said.

“Most contraventions are reported to the ATO by SMSF auditors engaged and paid by each SMSF via the auditor contravention reporting system. Thus, if there is any contravention, it is likely to be notified to the ATO in due course, and early engagement and voluntary disclosure is generally the best way forward.”

 

 

Miranda Brownlee
01 September 2020
smsfadviser.com

 


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David Forrest

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BEc (Acc), MBA, CPA, FFin

David has been in the Financial Services Industry for nearly 30 years. He was one of the founding Directors of the successful Financial Planning and Stockbroking Practice, Henderson Gregory Forrest, for a decade. Prior to that, he held senior roles in companies such as ING, KPMG Accountants and AMP. David was previously Chairman of OAMPS Superannuation Trustee Board and currently serves as an independent Board Director for several companies.

David’s extensive experience in all forms of superannuation, including Self Managed Super Funds (SMSF), Defined Benefit Funds, retirement funding through Account Based Pensions, stockbroking with a focus on Direct Share Investment, Taxation/Remuneration Planning, Centrelink, Aged Care and business management, equip him to advise expertly on all aspects of Financial Advice.

Those with a particular interest in superannuation/SMSFs, direct share investment, salary packaging or applying for the Centrelink Pension will find his knowledge and ability in formulating and implementing creative, logical and simple wealth creation strategies a valuable asset.

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Michelle’s career has spanned across the Financial Services, Retirement Living and Aged Care industries working in the private sector, not for profit and more recently with the state government for over 20 years. Her experience extends to many facets of the financial services industry, having worked in superannuation administration, technical support and financial planning practice administration.

Commencing with AMP and subsequently working in commerce and accounting roles with companies such as Brambles, Adelaide Bank Retirement Services, ECH Inc and SA Health and Wellbeing, Michelle returns to financial services after working in practice financial management at Henderson Gregory Forrest. This wide range of experience from senior accounting and management roles has provided Michelle with a strong background in business administration.

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Darren joins the Integrity team as a strong technical specialist with almost 20 years’ in the Financial Services industry. He has extensive experience advising clients on how to build and protect wealth, prepare for retirement and retire comfortably.

Commencing with advising clients on direct equities for over 10 years at Baker Young, Tolhurst Noall, and ABN AMRO Morgans, his career expanded to providing holistic client advice, having operated his own financial services licence and company. Most recently having worked for a 'Big 4' bank, he has welcomed the more personalised ‘client first’ approach that is evident at Integrity Financial Advisory.

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Natasha commenced working in the financial services industry in June 2008 and is a new addition to the Integrity team. During the past 11 years, she worked closely with advisers providing administration support in a share broking and financial advice business.

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Kelly has worked in the Financial Services Industry for over 10 years and has supported David since 2013. Kelly’s primary background is in customer service and administration.

On starting in the industry, Kelly initially focused on direct shares, stockbroking administration and client liaison. Since moving to the Client Service Manager role, Kelly has developed skills encompassing all aspects of financial planning including client advice implementation and term deposit management.

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Jasmine has worked in the financial services industry for over 12 years in all areas of client administration, working with David since 2013.

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Jasmine has gained her Certificate III in Financial Services qualification.

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Merrilyn has worked in the financial services industry for over 11 years in all areas of client administration, and is a new addition to our client services team, returning from Melbourne to join the team in June 2019.

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