The recent Cooper Panel review of superannuation took particular interest in SMSFs and - while endorsing them - made some interesting comments and recommendations, says Michael Jones, of tax advisers and accountants Cummings Flavel McCormack. The overriding message to fund trustees was to focus on investment strategies and keep things simple. There was also a strong recommendation about how penalties should be applied for trustees who get things wrong. Until now, the only sanction available to the ATO has been to remove a fund's complying status, which had severe tax implications and so was not widely enforced. Cooper recommends instead a sliding scale of penalties according to the severity of the breach. That may mean that more penalties are imposed, but the focus will shift from trustees to their advisers, as a measure of their responsibility for getting things right. The panel also recommended that works of art should be excluded as SMSF investments, but the government turned that down. There will, however, be new rules governing the storage and insurance of art works which may reduce their attraction as an investment. The panel reserved its decision on the question of borrowing by SMSFs, saying it would revisit the issue in 2 years.
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