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New SMSF penalty regime to kick in on July 1, 2014
Did you know you may have to fork out $10,200 if you lend money to a fellow self-managed superannuation fund (SMSF) member or a relative who is in dire need of some financial assistance? Or $1,700 for a breach as minor as failing to keep adequate records? The countdown is on, with only around four months remaining until the new SMSF administrative penalty regime kicks in on July 1.
If all this sounds familiar, it is because the SMSF penalty regime was essentially a measure that was due to be implemented by the previous federal government on July 1, 2013 but due to inadequate legislative support, the measure was held back. With the new government at the helm however, the measure has been given the nod and looks set to come into effect.
Currently, the Tax Office has a few ways in which it deals with non-complying funds. It can:
With its new regulatory powers however, the Tax Office will be able to prevent repeat breaches by:
It is worth remembering that the new administrative penalty regime will involve a system of penalty points for various breaches – with each penalty point worth $170. The most common penalties for breaches will carry units that range from five units to 60 units, equal to a value of $850 to $10,200. This will be a change from the current system where each penalty unit is only worth $110, meaning the highest fine an SMSF could ever be administered with was $6,600.
What the Tax Office will not do is:
require SMSFs to provide information to members on an annual basis.
Do ensure your SMSF is up to speed with all its administrative and compliance obligations. Consult this office to familiarize yourself with the new administrative penalties to avoid landing in hot water with the Tax Office.
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