Caution urged on tax penalties
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Monetary penalties imposed against self-managed superannuation funds (SMSFs) that fail to meet their legal compliance requirements should not be so high as to wipe them out, according to the Taxation Institute of Australia.
In a submission to the Cooper Review, the institute has recommended a review of the penalty regime applying to SMSFs, including the manner in which the top marginal tax rate is applied.
It said this regime should be changed so that the top marginal rate was applied only during the financial years that a fund remains non-complying.
"If an extra monetary penalty above this needs to be imposed, then the Taxation Institute has suggested that it be in line with having a deterrent effect, but not a punishment so large that it wipes out almost half of a taxpayer's retirement savings," the submission said.
The Institute said the monetary amount could be in the order of around $10,000 to $20,000 or based on a scale of the assets in the fund.
AUTHOR
Mike Taylor
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