SMSF & Family Law: Be alert!

Posted on February 26th, 2015

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by Mark Sullivan

Mark Sullivan is a Director at Mullane & Lindsay in Newcastle and specialises in Family, Relationship and Matrimonial Law

New laws applying to SMSF contraventions commenced after 1 July 2014 and imposed administrative penalties, education directions and rectification directions on defaulting trustees.  Trustees can be personally liable for penalties of up to $10,200 per breach and may be directed by the ATO to rectify the contravention and undertake an SMSF education course.

If your relationship has broken down and you have an SMSF with your ex partner/spouse then be on notice that your responsibilities as a trustee or trustee director continue until your SMSF is wound up, or you have rolled your interest out of the fund into some other complying Fund and resigned as a director/trustee.  You are therefore still at risk and need to act with care and diligence.

If your accountant or SMSF auditor finds a contravention, they will need to lodge an Auditor Contravention Report.  If that happens be alert as you will need to be equipped to discuss the breach and the remedial action with the ATO when they contact you.   Recent reports suggest this will be very shortly after the ATO receive the AC report.  You may find that your SMSF will be the subject of an audit if the trustees or directors are:

  • unaware of the breach and how it occurred, and cannot discuss the remedial action;
  • unwilling to talk to the ATO; or
  • unhelpful when the contact occurs.

If a contravention is identified on an audit, then an automatic administrative penalty will likely apply.

Mark Sullivan is a Director at Mullane & Lindsay, and practises extensively in Family, Relationship and Matrimonial Law. If you require any assistance in this area please contact Mark Sullivan to arrange a consultation or contact our Newcastle office.

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