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Trustee obligations of a disqualified person

There are ramifications when a trustee in a self managed super fund (SMSF) becomes a disqualified person.

An individual can become a disqualified person if any of the following conditions apply. If they:

-have been convicted of an offence involving dishonesty

-have been subject to a civil penalty order under the super laws

-are insolvent under administration

-have been disqualified by a court or regulator

A company is a disqualified person if any of the following conditions apply:

-a responsible officer of the company (such as a director, secretary, or executive officer) is a disqualified person

-a receiver, official manager, or provisional liquidator has been appointed to the company

-action has been taken to wind up the company

Under superannuation laws, if an individual becomes a disqualified person they must notify the ATO immediately of their disqualification- unless they were disqualified by the ATO- and cease being, or acting as, a trustee.

It is an offence for a disqualified person, who is aware of their status of being disqualified, to continue to be, and act, as a trustee of the SMSF.  Penalties for this can include fines and in some cases, imprisonment.

To determine whether a disqualified person can again become an individual trustee of a SMSF depends on how they were made disqualified:

Convicted of an offence involving dishonesty

An individual may apply for a declaration waiving their disqualified status within 14 days of the date of their conviction, and only if the penalty or prison term is less than stated in the legislation

Insolvent under administration

Once the individual is no longer insolvent under administration they are no longer a disqualified person

Disqualified by a court or regulator

Legislation sets out the circumstances in which an individual can request their disqualification to be revoked.

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What Are The Consequences Of Improperly Lodged Tax Returns?

May 4, 2021

With tax return season approaching quickly this year, you may have already started looking into lodging your income tax return. Ensuring that your details are correct and that any information about your earned income from the year is lodged is the responsibility of the taxpayer and their tax agent. However, if during this income tax return process the tax obligations of the taxpayer fail to be complied with, the Australian Taxation Office has severe penalties that they can enforce.

Australian taxation laws authorise the ATO with the ability to impose administrative penalties for failing to comply with the tax obligations that taxpayers inherently possess.

As an example, taxpayers may be liable to penalties for making false or misleading statements, failing to lodge tax returns or taking a tax position that is not reasonably arguable. False or misleading statements have different consequences if the statement given results in a shortfall amount or not. In both cases, the penalty will not be imposed if the taxpayer took reasonable care in making the statement (though they may still be subject to another penalty provision) or the statement of the taxpayer is in accordance with the ATO’s advice, published statements or general administrative practices in relation to a tax law.

The penalty base rate for statements that resulted in a shortfall amount is calculated as a percentage of the tax shortfall, or in the case of no shortfall amount, as a multiple of a penalty unit. This percentage is determined by the behaviour that led to the shortfall amount or as a multiple of a penalty unit, which are as follows:

If a statement fails to be lodged at the appropriate time, you may be liable for a penalty of 75% of the tax-related liability if:

To ensure that the statements, returns and lodgements are done correctly, and avoid the risk of potential penalties, contact us today. We’re here to help.