Earlier this month the ATO published their most recent SMSF Newsletter. Make sure that you understand your obligations.
Do you remember signing a Trustee Declaration when you established your SMSF? Certainly hope you do, because you signed your name next to some fairly important statements. Can you remember:
- "I am responsible for ensuring that the fund complies with the Superannuation Industry (Supervision) Act 1993"
- "I must keep myself informed of changes to the legislation relevant to the operation of my fund"
- I must "ensure the trust deed is kept up to date in accordance with the law and the needs of the members"
- By signing this declaration I acknowledge that I understand my duties and responsibilities as a trustee or director
The reason I am reminding you is that in a recent decision by the Administrative Appeals Tribunal, Shail Superannuation Fund v Commissioner of Taxation, the husband withdrew all the member benefits from the SMSF and left the country without paying the required tax. The fund was made non-compliant and although the AAT was sympathetic to the remaining wife's situation, they affirmed the ATO's decision.
Bottom line is that trustees remain equally responsible and liable if the SMSF breaches superannuation and tax laws. So, if you are signing the declaration, you MUST take responsibility and understand what you need to do. Not that it makes it easier to keep an eye on the partner who is planning to run off with all your retirement savings!
Further in their newsletter they provide some important information around their prosecution strategy. Not that you want to end up being prosecuted, but it is always important to know what you are in for if you are getting into the world of SMSF.
This strategy outlines factors used by the ATO when considering prosecution action. Although prosecution is not frequently used, it is an important part of the management of compliance. They have provided focus areas within their prosecution strategy and these include:
- Failing to lodge returns as required
- Illegal early release or use of monies in breach of the regulations
- Where false and misleading statements are made
- Incorrectly keeping records
- Lending money or giving financial assistance to members
- Failure to take reasonable steps to meet in-house asset rules
- Detection of fraud.
As we mentioned above, if you are going to take on the responsibility of being a trustee in person, or a corporate trustee of a SMSF, please make sure you keep up to date with what the other trustees are doing, AND ensure you understand what your rights and obligations are. Clearly ignorance is no excuse. Keep following SMSF Education and we will assist in keeping you up to date and letting you know what to look out for!