Badly run self-managed superannuation funds (SMSF) risk losing tax concessions as the Australian Taxation Office (ATO) subjects them to increased scrutiny, an SMSF administrator has warned.
The ATO’s decision to increase its SMSF compliance staff from 150 to 500 coincides with a surge in funds ahead of a June 30 deadline to allow a one-off $1 million contribution, Super Concepts sales and marketing manager Justin Sadler said.
“The ATO has recognised the massive growth in self-managed funds and is directing more resources to this area with the expectation it will triple its casework over the next two years,” Sadler said.
“The concern for many people taking out DIY superannuation without professional assistance to administer the fund is that minor infractions could see them penalised.”
Infractions include failure to keep minutes, an inappropriate asset mix, neglecting to lodge returns and reporting on time.
“This is set to be a record period for DIY superannuation with a 30 per cent increase in people applying to set up their own fund so far this financial year,” Sadler said.
There are around 330,000 self-managed funds in Australia with total assets of $234 billion, according to ATO data.
The number of SMSFs increased 9 per cent between December 2005 and December 2006. The average fund has $666,150 in assets.
“Where a fund does not meet the legal definition of a self managed superannuation fund we will give trustees an opportunity to restructure the fund without losing their complying status,” tax commissioner Michael D’Ascenzo told an SMSF conference last month.
“However where there are serious or repeated contraventions we will take firmer action,” he said.
