Education directions

What are they?  They are a direction by the ATO that the trustee undertakes an approved educational course.  The ATO will approve the educational course and may provide some of the courses.  Other bodies and institutions may provide educational courses.

When can they be issued?  The ATO may issue an education direction if the ATO believes (on reasonable grounds) that the trustee has contravened a provision of the SIS Act (other than the superannuation data and payment standards) or the SIS Regulations.

Comment: As no tuition fee can be charged by the course provider it is likely that the courses will only be provided by the ATO and industry bodies.  Further, the courses are likely to be web delivered and involve passive participation.

Comment: It is likely that there will be a number of different courses relating to particular areas of SMSFs, such as payment standards, investment rules and limited recourse borrowing.

What is the proof of completion? Once the approved educational course has been completed, the trustee must sign a trustee declaration to the effect that they understand their duties as a trustee of an SMSF.  This declaration must be signed within 21 days of completing the approved course.

Comment:  This declaration may not be the current s104A declaration (NAT ATO 71128).  It is open to the ATO to require a special purpose declaration to be signed for this purpose – a declaration which expressly refers to the completion of an approved trustee educational course.

While there is no tuition cost, any other costs incurred by a trustee undertaking an approved educational course cannot be paid by the SMSF and cannot be reimbursed by the SMSF.  These incidental costs are a personal expense of the individual trustee.

What if the trustee fails to comply?  If the trustee fails to comply with the direction, the trustee will be liable to a maximum penalty of $1,700 (ie 10 penalty units).  As the penalty is strict liability, no excuses for failure to comply will be permitted.