Individual trustees and directors of corporate trustees of SMSFs are personally liable to pay an administrative penalty from 1 July 2014 if they contravene the following provisions of the Superannuation Industry (Supervision) Act 1993 (SISA).
List of SISA contraventions and applicable administrative penalties
- Subsection 34(1) - Operating standards - 20 penalty units
- Subsection 35B(1) - Accounts and statements - 10 penalty units
- Subsection 65(1) - Lending to members and relatives - 60 penalty units
- Subsection 67(1) - Borrowings - 60 penalty units
- Subsection 84(1) - In-house assets - 60 penalty units
- Subsection 103(1) - Duty to keep minutes - 10 penalty units
- Subsection 103(2) - Duty to keep minutes of meetings - 10 penalty units
- Subsection 103(2A) - Retention of copy of section 71E election - 10 penalty units
- Subsection 104(1) - Duty to keep records of changes of trustees - 10 penalty units
- Subsection 104A(2) - Declaration of recognition of obligations and responsibilities - 10 penalty units
- Subsection 105(1) - Duty to keep and retain member or beneficiary reports - 10 penalty units
- Subsection 106(1) - Duty to notify of significant adverse events - 60 penalty units
- Subsection 106A(1) - Duty to notify of change in status of entity - 20 penalty units
- Subsection 124(1) - Written appointment of investment managers - 5 penalty units
- Subsection 160(4) - Education direction - 5 penalty units
- Subsection 254(1) - Information to be given to the regulator - 5 penalty units
- Subsection 347A(5) - Participation in the regulator’s statistical program - 5 penalty units
SMSF administrative penalty units
Each ATO administrative penalty unit has a dollar value applied based on when the infringement occurred.
The penalty units are indexed 1 July each new financial year.
- On or after 1 July 2020 - $222
- 1 July 2017 – 30 June 2020 - $210
- 31 July 2015 – 30 June 2017 - $180
- 28 December 2012 – 30 July 2015 - $170
- Up to 27 December 2012 - $110
For example, if an SMSF trustee is found to have breached Subsection 65(1) by lending to a member of the fund after 1 July 2020, a total of 60 penalty units will be applied at $222 each for a total of $13,320.
SMSF administrative penalties paid by trustees personally
The penalty cannot be paid or reimbursed from the assets of the fund.
Directors of corporate trustees are jointly and severally liable to the penalty. Individual trustees are each liable to the penalty.
Penalties may be wholly or partially remitted depending on the circumstances of each case.
Administrative penalties may also be imposed on SMSF trustees if they make false and misleading statements to us.
Penalties and individual versus corporate SMSF trustees
Where an SMSF has individual trustees, each trustee is liable when an administrative penalty is applied by the ATO.
Using the previous example, if an SMSF with two individual trustees leant money to members of the fund and was fined for a breach of s65(1) then two lots of $13,320 would need to be paid personally by each trustee (total $26,640).
By comparison, where it's a special purpose trustee company, only a single penalty of $13,320 will apply to the company. Directors of corporate trustees are jointly and severally liable to the penalty.
Administrative penalties are not tax deductible and cannot be paid from the assets of the SMSF or reimbursed by the SMSF.