The Federal Court has approved civil penalties for the trustees of a self-managed superannuation fund (SMSF) totaling $50,000 in relation to loan breaches of the SIS Act.
The members of the SMSF were husband and wife directors of the corporate trustee of the fund. Over a 4-year period, the SMSF made 80 loans to the members totaling id=”mce_marker”34,418. The members used the money to purchase items including a caravan, stud cattle and motor vehicles. These “loans” breached ss 62, 65, 84 and 109 of the SIS Act.
In addition, the SMSF had purchased a residential property and leased it to the members’ son, including $48,500 of furniture purchased by the fund. However, the rent which the lease required the son to pay, was not paid.
While a maximum penalty of $220,000 could apply for each contravention, the Court ordered the husband trustee to pay a total penalty of $30,000 (and the wife id=”mce_marker”0,000), together with $5,000 each for the Commissioner’s costs.
The Court said that the offences were serious but “fell well short of the worst possible case”. The Court also noted that the trustees (who have since been disqualified), had shown remorse, remedied their conduct, made early admissions and co-operated with the Commissioner.
Accordingly, the Court accepted that the penalties proposed by the Commissioner were within the proper range for the circumstances.
(DCT (Superannuation) v Graham Family Superannuation Pty Limited [2014] FCA 1101, Federal Court, Buchanan J, 15 October 2014.)
[FJM Note: These penalties were imposed under s196 of the Superannuation (Supervision) Act 1993, which allows the Court to impose penalties up to 2,000 penalty units which at id=”mce_marker”70 each, is a total of $340,000.]
[LTN 199, 15/10/14]