New Trustees Beware!
Administration penalties have become the ATO’s preferred compliance breach consequence. They are applied to SMSF trustee/directors personally and, as they can be as high as $12,600 per infringement, they are significant. The penalty is levied on a per trustee basis for individual trustees and collectively for all directors of a corporate trustee – a powerful argument in favour of corporate trustees.
Before a prospective new SMSF trustee/director accepts their appointment, they should carefully familiarise themselves with the fund’s history.
If the fund has been involved in a contravention prior to the appointment the previous trustees will generally be held liable however this may not be automatic, and the new trustee may be required to prove they were not involved.
Even if responsibility for previous transgressions is avoided, the new trustee will be involved in whatever rectification action is required and may, therefore, become responsible for a subsequent breach.
New trustees need to do their due diligence. At a minimum they should consider the fund’s most recent audit report and seek independent advice.