Family super fund members fined $50k over loans
Members of a family superannuation fund have been fined for using the fund to provide rent-free accommodation to their son.
The Federal Court of Australia heard that the Graham Family Superannuation Fund made 80 unauthorised loans totalling $134,418.62 to Ian Christopher Graham and Carolyn Ann Graham between 11 July 2008 and 30 June 2012.
The Court was told that the loans caused the market value ratio of the fund’s in-house assets to exceed the five per cent limit on in-house assets.
Court documents revealed that the Graham Family Superannuation Fund was established in October 2006, with Carolyn Graham rolling over $216,047.43 into it from an existing super fund in July 2007, while Ian Graham added a further $273,113.15 through the rollover of an existing fund in August 2007.
On 20 July 2007 the trustee contracted to purchase a residential property for $285,408.92, which was leased to the fund members’ son fully furnished until 4 February 2013. However, rent was not paid as required by the lease and by 30 June 2013 the arrears were $60,762.
The Court also heard that the fund was used to fund the purchases of a caravan and two motor vehicles – which were garaged with two adult sons of the Grahams’ – with the fund also paying for insurance, registration and maintenance of the purchases from which no income was derived by the fund.
Between September 2007 and September 2009, the trustee also expended $56,226.50 on the purchase of stud cattle for a livestock business conducted by the Grahams, with a further $6.736 was spent from the fund on insurance, registration fees, veterinary costs and other expenses, which again did not produce income for the fund.
In a submission to the court, the Deputy Commissioner of Taxation (Superannuation) said “the contraventions were serious, numerous, varied as to their particulars and sustained”.
The court issued fines totalling $40,000 plus costs, with Ian Graham ordered to pay $30,000, while Carolyn Graham was fined $10,000, and that each should be responsible for half the agreed costs of $10,000.
AUTHOR
Nicholas O'Donoghue
Recommended for you
The second tranche of DBFO reforms has received strong support from superannuation funds and insurers, with a new class of advisers aimed to support Australians with their retirement planning.
The financial services technology firm has officially launched its digital advice and education solution for superannuation funds and other industry players.
The ETF provider has flagged a number of developments as it formally enters the superannuation space through a major acquisition.
While all MySuper products successfully passed the latest performance test, trustee-directed products encountered difficulties.
