Yep, it is severe !From the ATO www,...

Yep, it is severe !
From the ATO www, p31

http://www.ato.gov.au/content/downloads/spr46427n11032.pdf

"
A complying fund that has been made non-complying
will suffer serious tax consequences. Your fund’s total
assets (less any member contributions that no tax
deduction has been claimed for) are subject to tax at
the highest marginal rate. Any income in a financial year
that a fund is non-complying is taxed at the highest
marginal rate.
"

Some other info!
http://taggart.clientcommunity.com.au/332/944/16999.html?SUB=31146