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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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News

Reviewing your super

July 19, 2018

The ATO is encouraging taxpayers to review their super this tax time.

Finding lost super or consolidating any unwanted multiple accounts can make a massive difference to your nest egg.

There is over $18 billion in lost and unclaimed super. Those who have changed their name, address, job or lived overseas are at high risk of having lost super.

During the last five years, more than $10.7 billion of super has been consolidated from over 2.1 million accounts through ATO online services.

The ATO is also reminding taxpayers that the new super deduction is available. Most people under 75 years of age can claim a tax deduction for personal after-tax super contributions.

Personal super contributions deductions provide a level of flexibility for young people that change jobs frequently, self-employed contractors, small business employees, freelancers and people whose employers do not offer salary sacrifice arrangements.

To claim a deduction for any personal super contributions made in 2017/18, you must lodge a notice of intent to claim a deduction with your fund and receive a confirmation letter from them before lodging your tax return.