SMSF - New Penalty Regime


SMSF - New Penalty Regime

Administering Your Self Managed Superannuation Fund – New Penalty Regime

A new trustee penalty regime has applied to SMSFs since 1 July 2014. Even though the members of an SMSF might think of its assets as “their” assets the SMSF’s assets are actually held on trust subject to a strict regulatory framework which is administered by the Australian Taxation Office (“ATO”). Previously the ATO had limited options to sanction inappropriate SMSF behaviour apart from deeming the fund to be non-complying – this power had significant adverse consequences and was seldom applied.

The new regime gives the ATO considerably more flexibility including the power to:

  • Issue rectification directives for contravention of SMSF law
  • Issue education directives to SMSF trustees
  • Impose administrative penalties (see below)

The administrative penalties can include:

Superannuation Breach Administrative Penalty   
Breach prescribed operating standards $3,400
Failure to prepare accounts and financial statements $1,700
Lending money to fund members or their relatives $10,200
Borrowing (except for approved limited recourse loans) $10,200
Breach in house asset rules(prohibited investments) $10,200
Failure to inform the regulator of significant adverse events $10,200
Failure to inform the ATO of a change in fund status $3,400
Record keeping failures (various breaches) $1,700
Failure to comply with education directive $850


These penalties can be imposed on each individual or corporate trustee of an SMSF or the directors of a corporate trustee.

Collectable Assets in SMSFs

The Superannuation Regulations already impose penalties of up to $1,700 relating to breaches of the strict rules for storage, insurance and use of “collectables” owned by SMSF, for example, artworks, antiques, motor cars etc.

These rules apply to all collectable assets acquired by an SMSF after 30 June 2011. The new rules then apply from 1 July 2016 in respect of assets acquired before 1 July 2011.