ATO crackdown on non-complying super funds

You have worked hard over the years and your super has accumulated a sum of money that you are proud about. You know that when you do decide to retire you will live a well-deserved comfortable life. After all of these years you believe that industry funds may not be for you and you decide to set up a self-managed super fund. But if you do not get the compliance right did you know that you can lose nearly half of your fund?

The laws regarding super funds can be very complex and are changing each year. The trustee is responsible for the management of the fund and to ensure that it complies with all the super laws. Simply accidentally transferring funds to your personal account from your super account is considered a breach.

If you are deemed to have a non-complying super fund, there is a significant financial impact on the SMSF because:
o for every year that the fund remains non-complying, its assessable income is taxed at the highest marginal tax rate which is currently 47%; and
o in the year that it becomes non-complying, it includes in its assessable income an amount equal to the market value of the fund’s total assets less any contributions the fund has received that are not part of the taxable income of the fund.

“You will be paying $145,700.00 in tax directly to the ATO”

To put this into perspective if your fund has $300,000 in assets and a $10,000 profit in the 2018 financial year, you will be paying $145,700 in tax directly to the ATO if it is deemed to be a non-complying fund. Compare this to the $1,500 in tax you would usually pay if it was a complying fund and you will see the value in investing in a professional to set up your SMSF.

To ensure that your fund doesn’t become a non-complying super fund contact the super experts at Jewell Moore.

Steven Myers CA

Manager