AAT overturns ASIC disqualification of SMSF auditor

The Administrative Appeals Tribunal has overturned the disqualification of an SMSF auditor by ASIC.

Mr Taylor SC, Senior Member for the AAT, said in his decision that he was satisfied that “Mr [Manoj] Abichandani is a fit and proper person to be an approved SMSF auditor for the purposes of the Act” and did not make misleading statements to ASIC. As such the AAT set aside the ASIC decision and decided that Mr Abichandani is not disqualified from being an approved SMSF auditor – he has been reinstated. Read more...

SMSF trustees penalised for sham loan involving SMSF

Administrative Appeals Tribunal (AAT), SMSF trustees, penalties, sham loanTwo SMSF trustees have been penalised for a sham loan involving their superannuation fund, in the ruling Morrison and Commissioner of Taxation [2015] AATA 114 (27 February 2015)*.

The ruling describes how the taxpayers wished to purchase an apartment, for which they would need to borrow. They could obtain $600,000, half the amount required, from an Australian bank. They asked their accountant and financial adviser for help. He told them they could obtain a loan from the Hua Wang Bank Berhad, incorporated in Samoa. The tribunal was informed that, under the terms of the licence, the bank was only authorised to deal with clients of the accountant. Read more...

Dates and payment methods key to avoid excess contributions

AAT decision, Hope and Commissioner of Taxation [2014] AATA 877, excess contributions, superannuationYet again an Administrative Appeals Tribunal (AAT) decision has shown the importance of dates and payment methods for avoiding making excess contributions to superannuation. This is particularly the case when making super contributions around the end of the financial year.

As described in the case of Hope and Commissioner of Taxation [2014] AATA 877, Mr and Mrs Hope were both directors and employees of their company. Part of Mrs Hope’s responsibilities was as bookkeeper, including payroll and making superannuation contributions. On the 30th of June 2008 $88,000 of superannuation contributions were transferred from the company bank account to the super funds of Mr and Mrs Hope, $42,000 and $46,000 respectively. These payments were made via the MYOB Clearing House using the M-Powered Superannuation system to two different APRA-regulated superannuation funds. However these amounts were received by the super funds on the 3rd and 4th of July 2008. Read more...

Early access to super: ‘fee’ included in assessable income

AAT - Early Access to SuperannuationThe Administrative Appeals Tribunal (AAT) has released another decision which shows that it does not pay to participate in superannuation early access schemes.

The decision of Vuong and Commissioner of Taxation [2014] AATA 402 (23 June 2014) following the ATO disallowed two objections by the taxpayer in relation to an early access scheme they participated in, including a significant ‘fee’ paid to the promoter.

Summary of the facts:

  • The taxpayer was aged 49 in 2008
  • He was a member of a large APRA fund
  • In 2008 he was referred by colleagues to a person who offered to help him access his super
  • The fee for this ‘service’ would be 29% of the balance
  • It appears that the taxpayer did not properly understand that this was not allowed
  • Rollover forms were submitted to the APRA fund, and as a result $114,697.23 was deposited into a bank account not controlled by the taxpayer
  • The 29% fee was taken, and the remaining $81,434 transferred to the taxpayer
  • Questions were raised by the taxpayer’s tax agent, and the tax return for the relevant year was lodged, with the intention of amending it when the facts were known
  • In 2011 the ATO audited the taxpayer, and included the full $114,697.23 in his assessable income, resulting in a tax shortfall of $45,298.64.
  • The ATO also imposed  a shortfall interest charge of $2,896.46.
  • The ATO later imposed an  administrative penalty of $11,324.65 – 25% of the shortfall
  • The taxpayer lodged two objections – one over the imposition of the administrative penalty and the other over the wish to claim the 29% ‘fee’ as a tax deduction
  • Both these objections were disallowed by the ATO, and then appealed to the AAT

Early Access Super included in Assessable Income?

Section 6.1 of the ITAA 1997 includes in Assessable Income amounts that are not Ordinary Income, called Statutory Income. Section 304.10, also of the ITAA 97, includes in Assessable Income the amount of a Superannuation Benefit if, among other things, the taxpayer receives a benefit from a complying superannuation fund where the benefit was received “otherwise than in accordance with payment standards prescribed under subsection 31(1) of the Superannuation Industry (Supervision) Act 1993″ unless the Commissioner “satisfied that it is unreasonable that it be included”. Section 307.15(2) of the ITAA 97 also provides that: Read more...

Disregarding Excess Non-Concessional Contributions

SMSF & Superannuation Rulings, Decisions, Cases and DeterminationsFollowing shortly after the announcement in the 2014 Federal Budget that there would be a change to allow for excess non-concessional contributions could be refunded from an SMSF comes a case from the Administrative Appeals Tribunal (AAT) showing when such a change would benefit SMSF members.

In the case of Thompson and Commissioner of Taxation [2014] AATA 339 (29 May 2014) the decision asked to be reviews was if the Commissioner of Taxation had acted correctly in not disregarding excess non-concessional contributions. Read more...