The AAT has upheld the Commissioner’s decision to include a superannuation benefit in a taxpayer’s assessable income as it was withdrawn in breach of the SIS Act.
The taxpayer (age 32) was experiencing financial problems and had been told by “friends” that he could apply to have his superannuation benefits paid to him as long as tax was paid and he was in financial hardship.
The taxpayer signed a form requesting $18,000 to be withdrawn from his employer-sponsored superannuation fund. He gave the signed benefit request form to another individual (recommended by his friends) who filled out the rest of the form. The form requested $18,000 to be rolled over to a self-managed superannuation fund (SMSF), operated by the individual, which had been registered by the Tax Office as a regulated superannuation fund. The $18,000 benefit was deposited into the SMSF’s bank account from which $12,225 was paid to the taxpayer. He was told that the remainder of the sum had been paid in tax and commissions but he received no documentation to that effect.
The AAT held that the early release of the superannuation benefit was properly included in the taxpayer’s assessable income under s 304-10 of the ITAA 1997 where it would be taxed at his marginal rate.
The AAT also upheld the Commissioner’s decision not to exercise his discretion under s 304-10(4) to exclude the amount from the taxpayer’s assessable income. While the taxpayer was not directly involved in the fraudulent enterprise arranged by others, the AAT said he should have suspected that the SMSF was not a bone fide superannuation fund.
Furthermore, the AAT refused to remit the 25% administrative penalty imposed by the Commissioner.
(AAT Case [2012] AATA 192, Re Brazil and FCT, AAT, Ref No: 2011/1073, Dunne SM, 4 April 2012.)
[LTN 72, 17/4]