Under s 166 of the SISA, the ATO can impose administrative penalties for a number of provisions and usually apply them in multiples. These provisions include:

• s 65(1): Lending to members of regulated superannuation fund: 60 penalty units

• s 67(1): Borrowing: 60 penalty units

• s 84(1): In-house asset rules: 60 penalty units

• s 103(1): Duty to keep minutes: 10 penalty units                                   

• s 104(1): Duty to keep records of change of trustee: 10 penalty units

Mr Butler said it is unfortunate timing that the penalty unit has been increased at a time when “most people can least afford the current penalties”.

“Indeed, the increase from $170 from 30 June 2017 to $222 on 1 July 2020 reflects an overall greater than 30 per cent increase when most people’s incomes, especially businesses, have been flatlined or in more recent times decreasing substantially,” he said.

“Something should be done to put a stop to this indexation which is not reflecting the reality of what’s happening in the real economy and world. This is similar to some lease arrangements that are indexed to CPI when the prevailing market value is much lower than what is in the lease document, and a market review is required to bring the rent back to reality.”

He warned SMSF professionals that given the current COVID-19 environment, it is likely that more and more SMSF trustees and directors will be hit up with admin penalties for accessing super without a valid condition of release to feed their families or seek to prop up their business or livelihoods.

“The ATO will not be that sympathetic to these cases and advisers need to ensure their clients are aware of the serious consequences of not playing by the rules,” he said.