From 1 July 2014, the ATO was granted power to issue administrative penalties to self managed superannuation fund (SMSF) trustees for breaches of the Superannuation Industry (Supervision) Act 1993 (SIS Act). While the ATO initially took a generous transitional approach for the first few years (issuing few and low level penalties), that has certainly changed in recent years. For example, we have seen quite a few six figure penalties issued including, in one case, penalties in excess of $500,000 before remission.

Given the ATO’s change of approach, which they have confirmed in many presentations in recent years, the ATO has now released PS LA 2020/3 under which it has given guidance as to when it will issue and remit penalties.

Of particular concern with the ATO’s recent approach to issuing penalties, has been:

Multiple penalties for the one action – for example, one action may cause a breach of multiple SIS Act provisions, resulting in SMSF trustees being penalised more than once for the same action (in breach of the totality principle)
A breach with multiple actions receiving multiple penalties – for example, an SMSF trustee making 12 monthly $1,000 loans to a related party is fined 12 times as compared to an SMSF trustee who makes one $12,000 loan is only fined once
Insufficient remissions of penalties, particularly in the above two circumstances

Each of these issues have been addressed to some extent in the PSLA. As a result, it is hoped that we see a softening of the ATO’s recent aggressive approach to issuing penalties.

To discuss further or for more information please contact:

Phil Broderick
Principal
T +61 3 9611 0163 l M +61 419 512 801
E pbroderick@sladen.com.au

Philippa Briglia
Senior Associate
T +61 3 9611 0173
E pbriglia@sladen.com.au