Andrew Yee, director of wealth management at HLB Mann Judd Sydney said it is important for those in this area to act now to ensure their fund is compliant before the financial year end.
Those in the SMSF space need to be particularly aware of new penalties that come into force on 1 July 2014, said Mr Yee.
“Previously, if trustees breached the rules, the ATO could declare the fund non-complying and subject the fund to a 45 per cent tax on the value of assets,” Mr Yee said.
This limited the ATO to handing out either a very substantial penalty or none at all, but going forward, the penalty that will apply will ultimately depend on the nature and severity of the fund breach.
“From 1 July 2014 the ATO will have the power to penalise the fund without declaring it non-compliant, depending on the type of breach that is involved. The ATO can still, in addition to penalties, declare the fund non-compliant. However, the change provides the ATO with a variety of enforcement options at their disposal,” said Mr Yee
Another change that will apply from 1 July 2014 concerns the way that SMSF’s will be required to receive member contributions from employers.
The change is part of the government’s SuperStream legislation, which aims to improve the efficiency of the superannuation system, said Mr Yee.
“Essentially, SMSFs will need to be able to accept superannuation contributions electronically to comply with the SuperStream Data and Payment Standard”.
“Contributions made by non-electronic means, such as cash or cheque payments, will not be acceptable,” he said.
Mr Lee also warned trustees of SMSFs to ensure that the fund’s auditor is ASIC approved and licensed.
“Since 1 July 2013 an auditor of a SMSF must be specifically registered and approved as a specialist SMSF auditor by ASIC. As this requirement did not exist prior to 30 June 2013, it was easier to qualify as an approved SMSF auditor”.
“Trustees of SMSFs cannot automatically assume that the previous year’s auditor will be ASIC approved and licensed, as many existing auditors did not apply or are still to applying for registration,” Mr Yee said.