After an almost $180,000 tax shortfall from a chartered accountant and approved SMSF auditor, the ATO has reiterated its higher standards for tax professionals.
Tax professionals to be held to higher SMSF standards
Tax professionals who decide to start an SMSF will be held to a higher standard, says the ATO.
The reinforced position came after the Administrative Appeals Tribunal (AAT) recently supported the Tax Office in its decision of WZWK and Commissioner of Taxation AATA 872 to amend tax assessments, impose tax shortfall penalties and disqualify a trustee following an ATO audit.
The trustee was the sole member of the SMSF and was a chartered accountant and an approved SMSF auditor.
The ATO found the trustee had breached the payment standards by illegally making payments from the SMSF to himself as a member that did not meet a condition of release.
The Tax Office amended the member’s 2015 and 2016 personal income tax assessments to include those payments in their assessable income.
The changes resulted in the tax professional owing approximately $413,000 in additional tax and over $179,000 in tax shortfall penalties due to the false and misleading statements in their income tax returns.
After the audit, the ATO referred the trustee to ASIC who disqualified them as an approved SMSF auditor, and the Tax Practitioners Board who terminated their tax agent registration.
“We take non-compliance seriously and will continue to hold tax professionals to a higher standard when it comes to complying with income tax and super laws when managing a SMSF,” said the Tax Office.
The ATO’s strict standards for tax agents conducting their personal SMSFs come after its amnesty program for small businesses was revealed, which encouraged those that had overdue income tax returns, fringe benefits tax returns or BAS to submit them before 31 December to avoid any associated failure to lodge penalties.