The sanctions come as the Tax Office intensifies efforts to stop trustees from overstepping the mark.
ATO hits SMSF trustees with record disqualifications, fines
The ATO disqualified a record 753 SMSF trustees and imposed $29 million in penalties last year and has flagged renewed resolve to crack down on those persistently breaking the law in 2023–24.
It said that compared to 2022, its compliance actions resulted in six times the amount of tax and penalties being imposed and more than triple the number of disqualifications.
It would “continue to take firm action against trustees who persistently fail to comply with their obligations and seriously breach the superannuation laws” throughout the next financial year.
“If you are a trustee who has breached the superannuation laws, we recommend you rectify the contravention as soon as possible. Otherwise, you are putting your retirement savings and fund's complying status at risk,” it said.
The ATO said the record sanctions were due to an increasing number of trustees who failed to comply with super rules, such as failing to audit and lodge annual returns, as well as taking money out prematurely.
It said trustees could only access benefits when they met a “condition of release”, which included events like retirement, turning 65 years old, financial hardship and being diagnosed with a terminal medical condition.
The ATO has recorded a rise in non-lodgment in recent years with over a quarter of SMSFs not lodging their first return in 2020. In July, the ATO also warned of a rise in illegal early release schemes during the first half of the financial year.
In 2021, deputy commissioner Emma Rosenzweig warned too many trustees lacked the financial confidence and capability to manage their SMSFs.
“Trustees should understand that, when they choose to set up an SMSF, they are running a super fund themselves. With this comes a set of obligations, responsibilities and risks that they should be fully prepared to meet,” she said.
The ATO recommended trustees guilty of not following rules to use its early engagement and voluntary disclosure service before ATO intervention.
“We will take this into account when deciding what actions we need to take,” it said.