Court fines SMSF trustees $20k each over lending breaches
Former husband and wife trustees of a self-management superannuation fund (SMSF) have been fined $20,000 each for borrowing more than $200,000 in contravention of the Superannuation Industry Supervision Act 1993 (SIS Act).
The Federal Court of Australia heard that Carolyn Robin Ryan and Joseph Ryan borrowed a total of $209,677 from the Lawryan Family Superannuation Fund, of which they were trustees, between June 2009 and June 2012, repaying just over $28,000.
The loans, which were used to cover their everyday expenses along with a line of credit relating to an unsuccessful dry-cleaning business they sold in 2007.
In a statement of claim by Australian Taxation Office deputy commissioners, Alison Lendon, the Ryans' loans breached the SIS Act, as the loans were made without the authorisation of the governing rules of the fund, the trustees failed to prepare or carry out a plan to address the excess in-house assets if the fund, and the loans were made to provide financial assistance to the respondents as members of the fund.
The court heard the ATO was alerted to the Ryans' borrowing when the fund lodged tax returns for the 2009 through to 2012 financial years, in late 2012.
On 16 October 2013, the Commissioner wrote to the Ryans asking each of them to show cause why they should not be disqualified from being trustees of super entities.
Just over a month later the Ryans responded to the Commissioner, acknowledging the contraventions, apologising for their actions, offering to rectify the contraventions and then roll-over the super benefits in the fund and close it. And in January 2014 they were both disqualified from being a trustee.
However, the Ryans did not move to rectify the contraventions, and by 1 June 2015 (when they transferred their super to a public fund), their super benefits in the fund were reduced to $6,034.20.
Recommended for you
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
Morningstar is going to offer research ratings of funds in the $3.5 trillion superannuation sector for the first time in response to demand from financial advisers.
Treasurer Jim Chalmers has opened a consultation into the design of the annual superannuation performance test, canvassing views on a range of reform options.
