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Federal court fine sets new SMSF benchmark
A self-managed superannuation fund (SMSF) trustee who it has been suggested used his fund as a personal ATM has been fined $40,000 in the Federal Court.
Specialist financial services law firm, Townsends Lawyers has pointed to the case in which the trustee was fined $40,000 for 30 separate breaches of Superannuation Industry (Supervision) Act (SIS Act) and ordered to pay costs amount to $14,000.
It said a Trustee of the Felix Super Fund had, over a number of years, borrowed from his SMSF — sometimes repaying the borrowed amounts and then re-borrowing them.
The Townsends analysis said that, effectively the SMSF had been treated as a personal ATM and that while the Trustee attempted to disguise some of the borrowings an auditor contravention report had seen the Australian Taxation Office (ATO) select the fund for audit which had revealed the extent of the borrowings.
It said that as a result, the court held that there had been contraventions of the sole purpose test and the in-house asset provisions.
Townsends said the relevant factors taken into account by the Court were the repetition and consistency of the contraventions, the attempt to disguise some of the borrowings, and the Trustee's awareness that the borrowings were in breach of the SIS Act.
It said that balancing these factors were the Trustee's co-operation with the ATO and the fact that he had personal issues.
The law firm noted that the case set a new benchmark for Trustee fines.
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