These new Superannuation Industry (Supervision) Act (SIS Act) administrative penalties came into effective from the 1 July 2014. That means that trustees may not be aware of them until they have lodged their 2015 Income Tax Return for their Self Managed Superannuation Fund (SMSF). One concern with these penalties is that they will be automatically imposed, as set out in Section 166 of the SIS Act. A second concern is that the penalty will not be applied to the SMSF but rather each of the trustees. So if you have a mum and dad SMSF with mum and dad as the members and as trustees then the penalties will be applied to both mum and dad. If you have a corporate trustee company the penalty will be applied to the company. Mum and dad will be jointly and severably liable as directors but the dollar value of the penalty will be half what it would be if mum and dad were individual trustees. Finally the size of the penalties. For a breach of the lending rules, the in house asset rules or the borrowing rules the penalty is $10,800 per trustee. Any breach of the operating standards is $3,600 per trustee. Not keeping proper minutes and records, or not advising the regulator of changes in trustees or directors carries penalties of $1,800 per trustee. Say you breached the in house asset rules and the operational standard and did not retain the necessary minute you could be imposed with penalties of $16,200 per trustee, or $32,400 if mum and dad are individual trustees. Ensure that you satisfy the provisions before your trustee signs off on your accounts. Should you require any information about a SMSF or the penalties imposed under the SIS Act please contact Peter Quinn by submitting an online enquiry or calling us on +61 2 9580 9166 to book an obligation free appointment. 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.