By way of background individuals seeking to provide for their retirement by utilizing a Self Managed Superannuation Fund need to follow the strict rules and regulations of the Superannuation Industry (Supervision) Act 1993 (SIS Act).
It would appear from the latest Australian Taxation Office (ATO’s) annual report that the number of disqualification of trustees has increased in the 2014 Financial Year by 33% compared to 2013, or double since 2012.
This would imply that more trustees have breached the requirements of the SIS Act or the ATO’s policing system of SMSF has improved substantially.
Why the disqualifications are of concern, is because if you have a SMSF and you become a disqualified trustee and your superannuation fund owns business property or an investment property it is likely that you will need to close down the fund by selling the property. It would not be simply a case of finding alternative trustees.
Many people assume that they will be fined and incur penalties but these latest statistics show that the ATO are prepared to go the extra step to disqualify trustees.
Common breaches in the audit of SMSF include;
- Loan to you or entities connected with you, regardless whether interest is paid on that loan or not,
- Access to your superannuation before you have reached retirement age, and
- Withdrawing lump sum from your superannuation fund before you have retired. That is, whilst you are still working even though you have reached retirement age.
It is imperative if you are the trustee of a SMSF you get appropriate advice before you make an investment even if you think that investment is appropriate, rather than at year end when the accounts and audit are finalised and need to be approved and signed. It may be too late to rectify the problem then.
To ensure that your SMSF is structured and administered correctly please contact Peter Quinn by submitting an online enquiry or calling us on +61 2 9580 9166 to book an obligation free appointment.
Disclaimer: The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.