From 1 July 2014 the ATO will have greater power in terms of penalising self managed superannuation funds (SMSFs).
Currently the ATO has the authority to make an SMSF non compliant, issue a court order for civil penalties and disqualifying a trustee.
Under the new system of penalisations the ATO now has other means of penalising an SMSF and imposing sanctions.
These new measures come under 3 categories; administration penalties, education penalties and rectification penalties.
Administrative penalties:
are fines issued if an SMSF breaks rules in the SIS act, which is essentially a rule book on what SMSFs can and can’t do. Those fined will be issued using a point system with penalty unit equating to a $170 fine. Individual trustees and directors of corporate trustees are personally liable to pay an administrative penalty.
An example of fines can be found on the ATO website:
https://www.ato.gov.au/Super/Self-managed-super-funds/In-detail/News/Legislation-update/Dealing-with-non-compliance-by-SMSF-trustees/#AdministrativePenalties
Education penalties:
are orders from the ATO to undergo an education program relating to the contravention and then to provide the ATO with evidence of completion. These courses will be in the form of an online course run by an approved provider or through a Webinar the trustees will have to participate in, provided by the ATO themselves.
Rectification penalties:
are written instructions, from the ATO to rectify the contravention, for the trustee to follow until the issue is resolved. Again evidence of the actions stipulated by the ATO must also be evidenced.
Submitted by: Mark Nasta- Accountant