The ATO has successfully appealed an AAT decision which had overturned the Commissioner’s disqualification of a trustee of a self-managed superannuation fund (SMSF).
The AAT had affirmed a non-compliance notice given to the SMSF for multiple breaches of the SIS Act but set aside the ATO’s decision to disqualify the trustee under s126A of the SIS Act: Coronica and FCT [2021] AATA 745. The AAT accepted that the contraventions were serious but determined that “appropriate enforceable undertakings” by the trustee would address any future compliance risk.
In allowing the ATO’s appeal, the Court found that the AAT had failed to address the correct statutory questions posed by s126A of the SIS Act. Rather than first considering if the preconditions were satisfied to enliven the exercise of the discretion, the Court said the AAT had determined the matter by considering various countervailing matters. The Court also found that the AAT fell into error by characterising the financial consequences for the fund becoming non-complying as a penalty on the trustee. As a result, the Court said the AAT did not give appropriate consideration to whether the trustee was a fit and proper person.
(CofT v Coronica [2022] FCA 72, Federal Court, Davies J, 7 February 2022.)
[LTN 24, 8/2/22]