The Australian Taxation Office (ATO) has stepped up the number of non-compliance notices issued to self managed superannuation fund (SMSF) trustees, in the first quarter of the 2008/09 financial year.
The ATO has made 24 SMSFs non-compliant during this period, the same number that was made throughout the entire 2007/08 financial year, according to Townsends Business and Corporate Lawyers.
The ATO issues a notice of non-compliance to an SMSF trustee if it deems the fund in question has not complied properly with the Superannuation Industry Supervision (SIS) Act.
The ATO has stated in its guideline PS LA 2006/19, issued in November 2006, that a contravention is only taken into account if it is considered an offence, and if the contravened provision is a civil penalty provision.
The regulator usually takes a few relevant factors into account before declaring an SMSF non-compliant, including taxation consequences and the seriousness of the contravention in question.
In regards to tax consequences, the ATO will generally consider if there are any innocent members of the SMSF who would be adversely affected, according to Townsends.
The ATO considers a range of circumstances regarding the seriousness of the breach, including whether it was intentional or reckless, and the extent to which the breach has affected the fund’s assets.
Townsends indicated that the level of cooperation shown by trustees toward the ATO is a further element considered during the process.
