Super update 3013
Some SMSF statistics As at 30 September 2013, there were over 516,000 SMSFs holding around $531 billion in assets. Although SMSFs are nearing one million SMSF members (980,000), or 8% of the 11.6 million members of Australian super funds, they account for 31% of the $1.6 trillion total super assets as at 30 June 2013. Common problems and ATO audit action The top contraventions reported to the ATO on auditor contravention reports relate to:
- loans
- borrowings
- a lack of separation of assets
- in-house assets
- not investing at arm’s length
- making acquisitions from related parties
- sole purpose breaches.
This year the ATO will review every fund reported to it by approved SMSF auditors. In 2012/13, the ATO’s audits:
- made 150 funds non-complying;
- and u disqualified 440 people from being a trustee.
Pension phase issues One area the ATO thinks could become a concern if not properly managed by all parties relates to Australia’s ageing population. Some issues it sees here include:
- Making sure that exempt current pension income (ECPI) is correctly paid. Sometimes the ATO finds the minimum pension has not been paid, meaning the pension exemption is lost. There are only limited circumstances where the Commissioner can grant an exception when the minimum pension is not paid.
- As trustees age and partners die, the ATO is concerned that it will see increasing instances where the surviving trustee is unaware of SMSF obligations and unable to meet them or is no longer legally capable. Tax agents (and the ATO) need to ensure that trustees have a plan for dealing with these eventualities.
New ATO powers and penalties The government has announced that, from 1 July, administrative penalties will apply to breaches of the super laws (note that this is still just proposed law at this stage). If the proposed legislation is adopted, SMSF trustees will be personally liable for penalties between $850 and $10,200, depending on the provision contravened. As trustees will become personally liable for these new penalties, they cannot use the resources of the fund to pay the penalty. While the start date is 1 July, it should be appreciated that contraventions, such as loans to members or relatives, still existing on that date will come under the new penalty regime. The ATO says the message for SMSF trustees is clear: “Rectify any contraventions as soon as possible or be liable for a penalty.”
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