Does your SMSF comply with the rules?

In a recent speech, Kasey Macfarlane, Assistant Commissioner at the Australian Taxation Office (the ATO), has indicated some of the ATO’s areas of focus in relation to self managed superannuation funds (SMSF) for the coming year.

In that speech she indicated that when it comes to regulatory breaches the ATO adopts “a tailored and differentiated approach depending upon the nature of the breach and with regard to the trustee’s compliance history and individual circumstances. In essence, we deal with minor breaches in a collaborative way by helping the SMSF to rectify the issue. For more serious, deliberate or persistent regulatory breaches we may take stronger enforcement action; in the most serious cases this can include disqualification of the trustee/s as well as making the SMSF non-complying”.

Ms Macfarlane also indicated that through its monitoring activities the ATO has “noticed some activities that raise possible cause for concern”.  Those activities include:

• limited recourse borrowing arrangements - for example where the loan is not structured correctly, where the property is not held by a custodian, breaches of the “single acquirable asset rule” and where the lender’s recourse is not appropriately limited to the underlying asset, and
• the promotion of arrangements that seek to gain a present-day benefit for the member - for example housing benefits, cosmetic surgery, holidays etc.

It is important that your SMSF complies with all of the laws which apply to it.  There is a range of adverse consequences which can arise if a SMSF does not comply.

Superannuation laws can be complicated – if your SMSF has not complied with the rules we encourage you to take action as soon as possible. 

If you have further questions, please contact frank@franklaw.com.au

This is not legal advice.