How the ATO Manages Non-Compliant SMSF Funds

August 2022

The ATO aims to assist Trustees with complying with super laws as governed by the Taxpayer’s Charter.

There are however several courses of action that the ATO can take to deal with SMSF Trustees who have not complied with the super laws where a breach has occurred. These include:

  • Education directions
  • Enforceable undertaking
  • Rectification directions
  • Administration penalties*
  • Disqualification of a trustee
  • Civil & criminal penalties
  • Allowing the SMSF to wound up
  • Freezing an SMSF’s assets
  • Notice of non-compliance. That is, each year the fund is non-compliant the assessable income may be taxed at the highest marginal tax rate, including treating assets of the fund (less any contributions) as assessable income in the year the fund becomes non-compliant.

*Administrative penalties cannot be paid or reimbursed by the fund. Directors of corporate trustees are jointly and severally liable for the penalty. Individual trustees are each liable for the penalty.

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