Each SMSF is required to lodge its own tax return to the ATO every year, in addition to an individual tax return.
Common and persistent issues that trigger ATO penalties are late lodgements of an SMSF’s annual return, according to Michael Hallinan, special counsel for superannuation at Townsends Business & Corporate Lawyers.
As the ATO has flagged on multiple occasions in the past and in spite of the overwhelming majority of trustees abiding by prescribed deadlines, Mr Hallinan believes the regulator remains intent on increasing on-time lodgements.
“If a fund doesn’t lodge on time, there’s [often] a real issue preventing timely lodgement, or there’s some deep problem with the trustees,” he said.
He also noted that under the ATO’s penalty regime, which came into effect in July 2014, the ATO can issue financial penalties for breaches of such obligations.
This regime allows the ATO the power to impose administration penalties on trustees for certain SIS Act breaches. In addition, the ATO has the power to direct SMSF trustees to fix a breach and direct trustees to undergo education in the event of a breach.
More broadly speaking, Mr Hallinan also noted the ATO appears keen to continue with using enforceable undertakings to deal with some minor non-compliance issues with taxpayers.
“At the moment they’re keen to ensure compliance by use of enforceable undertakings, which essentially the delinquent taxpayer undertakes to achieve certain outcomes,” Mr Hallinan said.
“I think from the ATO’s point of view, it’s an easy way of dealing with trustees [with] minor infractions as it were, as against major issues,” he said.
“This can involve an offer to undertake education directions and so forth."