The Federal Court has ordered that a self managed superannuation fund (SMSF) trustee pay a fine of $40K and the ATO’s costs of $14K for various loans made by the SMSF trustee in breach of the super laws. The decision of Deputy Commissioner of Taxation v Rodriguez involved a trustee making (and disguising) loans to himself totaling over $200K over a number of years. The Court found that that the loans breached sections 62 (sole purpose test) and 65 (financial assistance to members) of the Superannuation Industry (Supervision) Act 1993 as well as breaching the in-house asset rules. The trustee was also disqualified from being a trustee of an SMSF.

The fine was the largest given for super breaches in recent years and was agreed to between the parties. The breaches occurred before the introduction of the new SMSF penalty regime and therefore the ATO was compelled to take the matter to the Federal Court as a civil penalty matter. It will be interesting to see if similar matters will continue to be brought before the Courts or whether the ATO will simply rely on its penalty powers. 

For further information or advice please contact:

Phil Broderick
Principal
T: 03 9611 0163
M: 0419 512 801
E: pbroderick@sladen.com.au

 Melissa Brazzale
Associate
T: 03 9611 0161
E: mbrazzale@sladen.com.au