I was recently asked “What power or authority does the ATO have to review or audit a SMSF that has just been formed".
Well, the Australian Taxation Office (ATO) is the regulator of SMSFs and it is responsible for helping to protect the retirement income system by ensuring that SMSFs follow the rules outlined in the super and income tax legislation.
The ATO has substantial powers under the Superannuation Industry (Supervision) Act 1993 (SISA) to fully investigate a fund at any stage. If the ATO discovers that the assets of your fund are at risk, they can take action to protect them. Such action may include; disqualifying you as trustee, removing you as trustee, or freezing your SMSF’s assets.
If a trustee is prosecuted and is found guilty of either a civil and/or criminal offence under a civil penalty provision, the maximum penalties that may apply under Part 21 of the SISA are $220,000 (civil proceedings) and/or five years imprisonment (criminal proceedings).
In addition, offences of strict liability (such as acting as trustee while disqualified) that are punishable under the Criminal Code can also be subject to penalties and/or imprisonment. There have been a number of cases involving SMSF’s fraud. Stolen identities have been used to set-up SMSF’s and roll-in significant superannuation balances from other funds. There have been fraudulent schemes offering early access to superannuation money. This is why the ATO select certain SMSF establishments for investigation.
At MSCJ Superannuation Service we take care of the fund registration and liaising with the ATO to complete your SMSF Establishment.