Newsletter No. 9, September 2012

Stronger Super Reform

As there were many Superannuation reform measures becoming law recently, I decided to update The Self Managed Super Handbook.  The updated Second Edition (paper version) of the book is now available for purchase from  The eBook version will follow soon.

The new laws are in relation to:

  • the annual Supervisory Levy being increased from 1 July 2011
  • the option to have your excess concessional contributions taxed at your marginal tax rate instead of a flat 46.5%
  • the requirement for SMSFs to keep money and assets separate from personal assets and the imposition of a new penalty for failure to do so
  • the requirement for SMSF trustees to consider insurance for their members and the imposition of a new penalty for failure to do so
  • measuring the SMSFs’ assets at market value for reporting purposes and the imposition of a new penalty for failure to do so

All of the above new laws as well as new lodgement dates, new rulings and ATO publications are updated in the book.

It is becoming more and more necessary for trustees of SMSFs to take an interest in the superannuation law. It has always been my goal to educate trustees to understand the superannuation law so that you can provide for a safe and secure retirement through your complying SMSF.

Soon trustees will be directed to educate themselves.  Please read below on the proposed legislation that will provide the Commissioner of Taxation with more power to regulate SMSFs.

There are currently 423,000 SMSFs in Australia and this number is increasing each month.  The Commissioner of Taxation, as the Regulator of SMSFs, conducts audits on selected SMSFs to ensure that SMSFs are complying with the superannuation legislation and regulations in order to continue receiving tax concessions.

Under the current superannuation law, the Commissioner has a limited number of powers available to address instances of non-compliance.  The powers include such things as:

  • making a SMSF non-complying and removing the tax concessions (refer to Page 29 of The Self Managed Super Handbook)
  • applying to a court for civil and/or criminal penalties to be imposed (refer to Page 172)
  • accepting an enforceable undertaking from a trustee of a SMSF to rectify a contravention (refer to Page 169); and
  • disqualifying a trustee of a SMSF (refer to Page 166).

On 16 December 2010, the Assistant Treasurer and Minister for Financial Services and Superannuation, the Hon Bill Shorten MP, announced the Stronger Super reforms.  Stronger Super represents the Government’s response to the review of the governance, efficiency, structure and operation ofAustralia’s superannuation system.

The review recommended that the Commissioner be given additional powers in conjunction with his existing powers to enable him to have more flexibility to deal with non-compliance with the superannuation law.

Recently, on 21 August 2012, the Government released, on the Treasury website, ( draft legislation that will introduce administrative consequences and penalties for trustees of SMSFs.  The draft legislation, once it becomes law, will provide the Commissioner with additional power to deal with trustees and directors of corporate trustees of SMSFs who do not comply with the superannuation law.

The new law, proposed to take affect from 1 July 2013, will provide the Commissioner with additional powers to:

  • direct trustees and directors of corporate trustees of SMSFs to comply with an education and rectification requirement; and
  • impose administrative penalties for certain contraventions directly on individual trustees and directors of corporate trustees.

A rectification direction will require a person to undertake specified action to rectify the contravention within a specified time and provide the Commissioner with evidence of the person’s compliance with the direction.

An education direction will require a person to undertake a specified course of education within a specified time frame and provide the Commissioner with evidence of completion of the course.

A person will be liable to an administrative penalty if certain provisions of the superannuation law are contravened.  An administrative penalty must not be paid or reimbursed from the assets of the SMSF.  It must be paid personally by the person who has committed the contravention.

So, there is no time like the present to read The Self Managed Super Handbook and take an interest in understanding the superannuation law.  Trust me, it is a lot easier to learn the law and keep up-to-date with the law then try to understand it all in one go.

Monica Rule is the author of “The Self Managed Super Handbook – Superannuation Law for Self Managed Superannuation Fund”.  Her advice is general in nature and readers should seek their own professional advice before making any financial decisions.

Monica Rule