A previously complying sole member / sole trustee SMSF has been made non-compliant because control was not in Australia at all times.
Once the fund becomes complying again because the member / trustee returns to Australia permanently, are any additonal taxes applied. I have found 1 reference to a penalty of 47% of fund value charged when the fund becomes compliant again.
The fund had assets
- $200,000 tax-free contributions ie. contributed from after tax savings
- $100,000 taxable amounts ie. contributed from pre-tax income
- $10,000 is earned in the year the fund is made non-compliant
Reduced to
- $200,000 tax-free contributions ie. contributed from after tax savings
- $53,000 taxable amounts ie. contributed from pre-tax income (originally $100,000, reduced by 47% tax in year of non-compliance)
- $5,300 from earnings in the year the fund is made non-compliant (originally $10,000, reduced by 47% tax in year of non-compliance)
ie. a total of $258,000 remaining of the original $310,000
There is one reference online to a further 47% tax impost on fund value at the time the fund is once again compliant, reduced to 15% if compliance is declared at the beginning of the year
The questions
Q1 - The fund is made compliant again in FY 2024, part way through the year ie. part year. Are there any tax or penalty obligations arising from the transition back to "complying" & if so how much and are the tax-free and taxable components treated any differently ? One author suggested this would incur a 47% tax on total fund value
Q2 - The fund is made compliant again in FY2024, at the beginning of the year ie. for the full year. . Are there any tax or penalty obligations arising from the transition back to "complying" & if so how much and are the tax-free and taxable components treated any differently ?. One author suggested the fund would incur a 15% tax on on total fund value
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