Penalties for Superannuation Fund Trustees

Last updated June 2011

The Taxation Officer is increasingly punishing trustees of self managed superannuation funds (SMSF's) who break the rules.

It’s vital SMSF trustees make sure they understand their legal and regulatory obligations as they are legally responsible for managing their fund.

There are requirements covering all aspects of operating a SMSF that must be complied with. Some examples include what assets a SMSF can and cannot purchase, when the money can be taken out and by when tax returns and financial reports must be prepared.

It is becoming increasingly common to see situations where SMSF members try to access the money that has been tucked away in their super fund before they are legally allowed to.

In one case, the trustees of a self managed superannuation fund sold a property belonging to the fund and used the proceeds of nearly $150,000 to pay a private debt.

The couple had taken the assets from the superannuation fund before meeting any conditions of release such as retirement or reaching preservation age.

The Taxation Office found out and took the trustees to court. The Federal Court declared that the trustees had breached superannuation legislation. The trustees were issued penalties of $30,000 and ordered to pay $32,500 in costs for breaching the rules relating to their fund.

If you are a trustee of a super fund and are not sure of your responsibilities, we encourage you to talk this over with us. This is particularly important if you are thinking about doing something with your fund’s assets, as it is often very difficult to fix a problem once the damage has been done.