SMSF trustee fined after taking planner advice on loans

An SMSF trustee has been ordered to pay fines and legal costs of $37,500, after taking advice from a financial planner before providing unauthorised loans to his brother-in-law, which put led to multiple breaches of the Superannuation Industry (Supervision) Act.

The Federal Court of Australia heard that Anthony Shaune Lyons provided his brother-in-law, Paul Ellis with a series of loans totalling $190,000 — more than 97 per cent of the value of the fund's assets — between 3 July 2008 and 25 May 2009.

On 3 July 2008, Lyons in his capacity as trustee of the fund commenced lending money to Ellis, who immediately transferred the loan funds to an account to provide working capital to support Lyons' retail business, which he ran with his then wife, Julianne Marie Lyons, until March 2010, when they became bankrupt as a result of personal debts incurred in the carrying on of the business.

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The Court heard that Mr and Mrs Lyons had been advised by Steve Skeen, a financial planner that they could "liberate monies from the fund by entering into those arrangements", advice which was described as "wrong" by the presiding judge.

Lyons was found to have breached sections 62, 65, 84 and 109 (1) of the Act, on the grounds that the market value ratio of the fund's in-house assets as at 30 June 2010 was 97.96 per cent, exceeding the five per cent limit, and that the loans were made in the expectation that they would not be repaid to the fund.

The Court ordered Lyons to pay the Deputy Commissioner of Taxation (Superannuation) a penalty of $32,500, and costs for $5000, in monthly instalments of $1041.67 over a period of 36 months, which included a "discount" that was provided on the basis that "Lyons relied on professional advice" and gave early and full cooperation.




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