There are various courses of action available to the ATO when trustees of self-managed super funds (‘SMSFs’) have not complied with the super laws, including applying administrative penalties.
A number of factors determine the amount of the administrative penalty, including:
- the type of contravention;
- when it occurred; and
- the number of penalty units that apply.
For example, if an SMSF contravenes a provision in relation to borrowings during the 2021/22 financial year, the ATO may apply a penalty of 60 penalty units and, at $222 per unit for that year, this would result in the SMSF trustee having to pay $13,320. This could be even more if there are multiple contraventions.
Note that the Government recently introduced a Bill to increase the value of a penalty unit for Commonwealth offences committed on or after 1 January 2023 from $222 to $275.
The ATO imposed total administrative penalties of around $3.4 million on SMSF trustees last year for contraventions such as trustees illegally accessing super benefits, loans, or financial assistance given to members.
Also, just because a trustee receives an administrative penalty doesn’t mean the ATO won’t undertake any other compliance action, such as issuing a notice of non-compliance or disqualifying the relevant entity as a trustee.
