I don't want to dwell on negatives but sometimes it's worthwhile to do so.

The ATO has a very different attitude now to SMSF's than 5 years ago.  Then, it was about education and broad guidelines and saving for retirement.  Now, tough action.

There are now over 500,000 SMSF's, controlling around $585 billion, and growing.  No Government can afford to ignore such a sector, and the Financial System Inquiry report released in December 2014 had little criticism of SMSF's.  We'll deal with the recommendations in another Blog, because there are concerns about borrowing in super, limits on non-concessional contributions, access to dividend imputation, etc and the Government has to be considering how it can access this resource.  (It could pay off most of the debt left by the Labor government!).

1. Trustee Penalties

From 1 July 2014, a range of penalties can be imposed personally on the trustees and they cannot be paid from the Fund's resources.  They start with compulsory education, then increase to require rectification of breaches, and then finally, significant monetary penalties for either failure to act or for a serious or intentional breach.

2.Surveillance

Auditors are required to report every breach of compliance.  The ATO jumped last year and disqualified 585 trustees.  The new standard business reporting systems (SBR) provides more information sooner, so the ATO will act faster in the future on serious breaches.

3."Dire Warning"

The ATO prosecuted and required a custodial or community service for a trustee who failed to lodge several years worth of SMSF annual returns.  The trustee had accessed the SMSF's accounts to prop up a failing business and ultimately lost the money.  The ATO disclosed that prosecution was a last resort and would rather have assisted in clearing up the obligations.  (Which really means they didn't care about losing the money, governments do that really well all the time, but make sure you send in the paperwork).

As you see, there are consequences now that were previously not available to the ATO, so always check that what you plan to do with SMSF assets does not breach ATO guidelines.