Breaches on SMSF's

[johnnydragon]

Hey all,

I have a general question regarding SMSF's - if one had say, $400,000 and about $100,000 was withdrawn (or transferred out of) and was not around for the audit, what fines would be in order for the trustee? I know that it can attract jail terms or whatnot but what is the norm for a first time breach?

I have been asked this question by someone interested in starting up his SMSF however all I could say to him was "don't do it" as the ATO would come down hard, but I can't seem to find any comparisons as to what results from this type of breach.

 

[Prospector]

Hey all,

I have a general question regarding SMSF's - if one had say, $400,000 and about $100,000 was withdrawn (or transferred out of) and was not around for the audit, what fines would be in order for the trustee? I know that it can attract jail terms or whatnot but what is the norm for a first time breach? .

I believe a first time = last time and no nice warnings. I understand the smsf will be taxed at the highest possible rate, and if you are directors of the trustee, would also suffer consequences for that too. Dont even think about it.

 

[jono1887]

I believe a first time = last time and no nice warnings. I understand the smsf will be taxed at the highest possible rate, and if you are directors of the trustee, would also suffer consequences for that too. Dont even think about it.

What consequences would the trustees suffer??

 

[awg]

My research is as follows.

If the monies were withdrawn "illegally"

a) the auditor MUST report the breach

b) OR, the trustee voluntarily reports the breach, prior to, or in consultation with the auditor

If the breach is voluntarily reported and the money is fully repaid to the fund, then a warning and/or fine maybe all, depending on the situation ( for a 1st offense)

If the breach is not voluntarily reported and /or the money cannot be repaid, the fund loses its tax status, and tax becomes payable at marginal rate, penalty rates may also apply and a fine will be issued to the trustee.

This is very expensive if the fund has a large amount in it.