Tax and Superannuation Laws Amendment (2014 Measures No. 1) Act 2014 (11 of 2014)

Schedule 2   Administrative directions and penalties for contraventions relating to self managed superannuation funds

Superannuation Industry (Supervision) Act 1993

22   After Part 19

Insert:

Part 20 - Administrative directions and penalties for contraventions relating to self managed superannuation funds

Division 1 - Object and scope of this Part

157 Object of this Part

The object of this Part is to provide administrative consequences for contraventions of this Act or the regulations that relate to self managed superannuation funds. This Part:

(a) allows the Regulator to give rectification directions and education directions; and

(b) imposes administrative penalties for certain contraventions.

158 Scope of this Part

This Part applies in relation to self managed superannuation funds that are regulated superannuation funds.

Division 2 - Directions

159 Rectification direction

(1) This section applies if the Regulator reasonably believes that a person who is:

(a) a trustee of a self managed superannuation fund; or

(b) a director of a body corporate that is a trustee of a self managed superannuation fund;

has contravened a provision of this Act (other than Part 3B) or the regulations in relation to the fund.

(2) The Regulator may give the person a written direction (a rectification direction ) requiring the person:

(a) to take specified action to rectify the contravention; and

(b) to provide the Regulator with evidence of the person’s compliance with the direction.

(3) In deciding whether to give a person a rectification direction, the Regulator is to have regard to:

(a) any financial detriment that might reasonably be expected to be suffered by the fund as a result of the person’s compliance with the direction; and

(b) the nature and seriousness of the person’s contravention; and

(c) any other relevant circumstances.

(4) A rectification direction must specify the period within which the person must comply with the direction (which must be a period that is reasonable in the circumstances).

Note: The period may be affected by the operation of subsection 164(7).

(5) The Regulator must not give a rectification direction in relation to a contravention if:

(a) the Regulator has, under section 262A, accepted an undertaking given by a person; and

(b) the contravention is covered by the undertaking; and

(c) the undertaking has neither been withdrawn nor varied in a way that means the contravention is no longer covered by it.

(6) A person to whom a rectification direction is given must comply with the direction before the end of the period specified in the direction for the purposes of subsection (4).

(7) A person commits an offence of strict liability if the person contravenes subsection (6).

Penalty: 10 penalty units.

160 Education direction

(1) This section applies to the following persons:

(a) a trustee of a self managed superannuation fund, if the Regulator reasonably believes that the trustee has contravened a provision of this Act (other than Part 3B) or the regulations in relation to the fund;

(b) a director of a body corporate that is a trustee of a self managed superannuation fund, if the Regulator reasonably believes that:

(i) the director has contravened a provision of this Act (other than Part 3B) or the regulations in relation to the fund; or

(ii) the trustee has contravened a provision of this Act (other than Part 3B) or the regulations in relation to the fund.

(2) The Regulator may give the person a written direction (an education direction ) requiring the person:

(a) to undertake a specified approved course of education (see section 161); and

(b) to provide the Regulator with evidence of completion of the course.

Note: See also section 104A (recognition of obligations and responsibilities).

(3) An education direction must specify the period within which the person must comply with the direction (which must be a period that is reasonable in the circumstances).

Note: The period may be affected by the operation of subsection 164(7).

(4) A person to whom an education direction is given must comply with the direction before the end of the specified period.

Note: Section 166 imposes an administrative penalty for a contravention of subsection (4).

(5) A person commits an offence of strict liability if the person contravenes subsection (4).

Penalty: 10 penalty units.

161 Approval of courses of education

(1) The Regulator may, in writing, approve one or more courses of education for the purposes of giving education directions.

(2) A course approved under subsection (1):

(a) may be provided by the Regulator or by another entity; and

(b) must be a course for which no fees are charged in respect of persons who undertake the course in compliance with education directions.

(3) An approval under subsection (1) is not a legislative instrument.

162 Costs of course of education

If a person undertakes a course of education in compliance with an education direction, the person must ensure that none of the costs associated with undertaking the course are paid or reimbursed from the assets of the fund in relation to which the education direction was given.

163 Variation or revocation on Regulator’s own initiative

The Regulator may, at any time, vary or revoke a rectification direction or an education direction by written notice given to the person to whom the direction was given.

164 Variation on request

(1) A person to whom a rectification direction or an education direction is given may request the Regulator to vary the direction.

(2) The request must be made by written notice given to the Regulator before the end of the period specified in the direction for the purposes of subsection 159(4) or 160(3).

(3) The request must set out the reasons for making the request.

(4) The Regulator must decide:

(a) to vary the direction in accordance with the request; or

(b) to vary the direction otherwise than in accordance with the request; or

(c) to refuse to vary the direction.

(5) If the Regulator does not make a decision on the request before the end of 28 days after the day the request was made, the Regulator is taken, at the end of that period, to have decided to refuse the request.

(6) If the Regulator makes a decision on the request before the end of the period referred to in subsection (5), the Regulator must:

(a) notify the person of the Regulator’s decision; and

(b) if the decision is to vary the direction (whether or not in accordance with the request) - give the person a copy of the varied direction; and

(c) if the decision is to refuse to vary the direction, or to vary the direction otherwise than in accordance with the request - give the person written reasons for the decision.

(7) If a person makes a request under this section, then, for the purposes of subsection 159(6) or 160(4), the period specified in the direction for the purposes of subsection 159(4) or 160(3) is taken to be extended by 1 day for each day in the period:

(a) beginning at the start of the day the request was made; and

(b) ending at the end of the day that the Regulator notifies the person that a decision has been made on the request.

165 Taxation objection

A person who is dissatisfied with:

(a) a decision of the Regulator to give a rectification direction or an education direction, or to vary one otherwise than in accordance with a request under section 164; or

(b) a decision of the Regulator under section 164 to refuse to vary a rectification direction or an education direction;

may object against the decision in the manner set out in Part IVC of the Taxation Administration Act 1953.

Division 3 - Administrative penalties

166 Administrative penalties in relation to self managed superannuation funds

(1) If a person referred to in subsection (2) contravenes a provision of this Act specified in the table, the person is liable to an administrative penalty. The amount of the penalty is the amount specified in the table for the provision.

Note: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

(2) For the purposes of subsection (1), the persons are:

(a) a trustee of a self managed superannuation fund; or

(b) a director of a body corporate that is a trustee of a self managed superannuation fund.

Note: Collection and recovery of administrative penalties imposed by this section is dealt with in Part 4-15 of Schedule 1 to the Taxation Administration Act 1953.

(3) If a trustee of a self managed superannuation fund on whom a penalty is imposed by this section is an individual, a reference in Part 4-15 or Division 298 in Schedule 1 to the Taxation Administration Act 1953 to an entity is taken to be a reference to that individual in his or her personal capacity.

167 Administrative penalty and civil penalty

If:

(a) a person is liable to pay an amount by way of administrative penalty imposed by section 166 because of an act or omission of the person; and

(b) proceedings against the person are commenced for a contravention of a civil penalty provision constituted by the act or omission;

then (whether or not the proceedings are withdrawn):

(c) the person is not liable to pay the amount; and

(d) any amount paid, or applied by the Regulator, in total or partial discharge of that liability is to be refunded to the person, or applied by the Regulator in total or partial discharge of another tax-related liability of the person.

Note: Section 8ZE of the Taxation Administration Act 1953 deals with the situation of a person against whom a criminal prosecution is instituted.

168 Penalty must not be reimbursed from fund

An administrative penalty imposed by section 166 must not be paid or reimbursed from the assets of the fund in relation to which the administrative penalty was imposed.

169 Joint and several liability of directors of corporate trustee liable to administrative penalty under section 166

(1) This section applies if a trustee of a self managed superannuation fund:

(a) is liable to an administrative penalty imposed by section 166; and

(b) is a body corporate.

(2) The directors of the body corporate at the time it becomes liable to the penalty are jointly and severally liable to pay the amount of the penalty.