Trustees to rectify contraventions of superannuation legislation

This proposed measure will enable the ATO to direct SMSF trustees to rectify a contravention where a contravention remains unrectified. The aim is to return the SMSF to its position before the contravention happened, or to make sure it is complying with the law.

The contravention will have to be rectified within a reasonable timeframe as determined by the ATO, taking into account the contravention and circumstances of each case.

Rectification of a contravention may involve actions to ensure the fund is returned to its position before the contravention and ensure there is no detriment to the fund. For example, a breach of the prohibition of lending to members can be remedied by the repayment of the loan by the member to the fund with interest where appropriate.

• In other cases, rectification may not be possible or appropriate, as some transactions may still be valid and cannot be reversed. In such cases, the ATO may use other penalties and sanctions to deal with the contravention.
• A direction to rectify would be used in tandem with current and proposed compliance treatments. Unlike current enforceable undertaking arrangements, this power will be restricted to rectification of a contravention only. Trustees may still offer the ATO a written undertaking under the existing legislation.

This is part of the Stronger Super suite of measures.

Media release

For more information, refer to media release no. 074, Stronger Super - Self Managed Super Fund Reforms, issued on 10 May 2011 by the Assistant Treasurer and Minister for Financial Services and Superannuation.

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