The Australian Taxation Office (ATO) said it had to make 185 self-managed superannuation funds (SMSF) non-complying in between July 2009 and June 2010 for serious non-compliance with the super laws.
The main breaches involved SMSFs providing loans to a related party, illegal early release of super, serious breaches of the in-house asset rules, and refusal to lodge returns.
The ATO said it knew that most trustees were trying to do the right thing and that in most cases, even when there had been non-compliance, the ATO would still seek to work with trustees to fix the problems.
“While we may work with these trustees to get them back on track, where the breaches are significant we have been imposing serious sanctions such as making the funds non-complying,” the ATO said.
Meanwhile, SMSFs should not be registered until assets are held by the fund, the ATO said.
For funds other than those established under Commonwealth, state or territory statutes, a super fund comes into existence after the trust deed has been signed and assets, for example a first contribution, have been set aside for the benefit of identified members.
The ATO said it had also made changes to its systems and that from January 2010, the SMSF annual return would not be able to be processed if there were no assets in the fund.
“Only SMSFs which have been wound up and are lodging their final annual return can report ‘zero’ assets,” the ATO said.
“Trustees of SMSFs which cease to hold any assets must notify the ATO that the fund has been wound up.”
