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30 September 2015

The latest SMSF penalty case – Deputy Commissioner of Taxation v Ryan [2015] FCA 1037

The Federal Court has again imposed pecuniary penalties on trustees of an SMSF for breaches of the Superannuation Industry (Supervision) Act 1993 (SIS Act).

The Federal Court has again imposed pecuniary penalties on trustees of an SMSF for breaches of the Superannuation Industry (Supervision) Act 1993 (SIS Act).

Mr and Mrs Ryan withdrew a total of $209,677 from their SMSF between June 2009 and June 2012 in 68 transactions. The withdrawals were treated as loans, but were undocumented, unsecured, no interest was paid and no repayment date agreed. Mr and Mrs Ryan repaid $28,313.

Mr and Mrs Ryan agreed they had comitted contraventions of sections 62 (sole purpose test), 65 (loans to members), 84 (in-house assets) and 109 (not dealing on arm’s length terms) of the SIS Act.

The ATO disqualified Mr and Mrs Ryan from being the trustees of a superannuation entity, and they rolled their remaining superannuation benefits into a public superannuation fund.

On 18 September 2015, Edelman J imposed pecuniary penalties of $20,000 on each of Mr and Mrs Ryan, to be paid in monthly instalments over three years. In setting the amount, Edelman J took into account the substantial amount involved (nearly all the benefits in the SMSF), the fact the contraventions were deliberate, the Ryan’s prior contraventions and financial situation and the high level of cooperation the Ryans provided to the ATO.

Mr and Mrs Ryan were also ordered to pay the ATO’s costs.

This case again highlights the options available to penalise trustees who breach the SIS Act.

If you would like more information on these issues, please contact Scott Hay-Bartlem on +61 7 3231 2458 or Clinton Jackson on +61 7 3231 2451.

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This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.

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