The Tax Office has published a list of the top 10 types of compliance mistakes made by SMSF trustees. The data from which the list is taken is based on the type of contraventions reported by approved SMSF auditors since 2005 (when compulsory contravention reporting started) up to June 30, 2012.
The top 10 contravention types in percentage terms are as follows:
Of the top 10, three types of contravention represent more than two-thirds of the proportion of asset values (67.8%). These are, in order of asset value proportion:
- in-house assets
- separation of assets
- loans to members/financial assistance.
The Tax Office has a number of options when dealing with SMSF compliance issues, including making the fund non-complying for taxation purposes, imposing civil penalties (or perhaps criminal penalties for more serious breaches), and possibly disqualifying a trustee.
As well, the Tax Office can issue rectification and education directions for contraventions, and an administrative penalty (which must be paid personally by the trustee or the director of the trustee company and cannot be paid or reimbursed by the SMSF).