SMSF Tax Returns: The ATO Hard Line on Late Lodgment

Are you the trustee of a Self-Managed Superannuation Fund (SMSF)? Have you lodged your SMSF’s tax returns by the due date?

If not, you run the risk of being disqualified by the ATO from acting as the trustee of your SMSF under subsection 126A of the Superannuation Industry (Supervision) Act 1993 (“the SIS Act”).

In 2023, the ATO disqualified a total of 753 trustees of SMSFs and added them to the disqualified trustees register. This number has more than tripled from the 2022 income year. The most common reason for applying these sanctions was to deal with SMSF members who illegally accessed their superannuation benefits before meeting a condition of release.

Are You at Risk of Disqualification?

Section 126A of the SIS Act gives the ATO the power to disqualify an individual if they are satisfied that the individual or the responsible officer of the corporate trustee has:

1. contravened the SIS Act; and
2. that the nature and seriousness of the contravention, or the number of contraventions, provides grounds for disqualifying the individual.

Under subsection 126A(3) of the SIS Act, the ATO may also disqualify an individual if they are satisfied that the individual is not a fit and proper person to be a trustee or a responsible officer of a corporate trustee.

The late lodgment of an SMSF’s tax returns has proven to be enough for the ATO to exercise its powers under subsection 126A(1) of the SIS Act and disqualify individuals from being trustees of the SMSF.

The consequences of being disqualified as a trustee are significant. Including:

1. Disqualified trustees must remove themselves from the position as trustee as it is an offence to continue to act as trustee of the SMSF (s126K of the SIS Act). Penalties available for contravention of s126K of the SIS Act include 2 years imprisonment.
2. The fund will no longer comply with Section 17A of the SIS Act. The assets of the fund will need to roll over to a retail fund.
3. You are unable to set up a new self-managed super fund.
4. You cannot be a trustee of an other self-managed superfund.

If you are a trustee who is non-compliant with superannuation law, you must rectify the contravention as soon as possible. Otherwise, you are putting your retirement savings and fund’s complying status at risk.

How can we help?

If you are concerned that your SMSF might be non-compliant or if you have received a notice from the ATO, you must act promptly

The ATO may revoke a disqualification on application by the disqualified individual. Our experienced lawyers can assist you in making this application.