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17 Apr 12 Early access superannuation payment assessable – Brazil

The Administrative Appeals Tribunal has affirmed the Commissioner’s objection decision to include in the taxpayer’s assessable income an amount of preserved superannuation benefits that had been transferred from an APRA-regulated fund into a self-managed superannuation fund and then paid to the taxpayer.

The taxpayer was 32 years old, and in need of money for living expenses. He participated in a scheme for the early release of his superannuation benefits. Those benefits consisted of employer contributions by a former employer. Under the scheme, an amount was transferred from the AON Master Trust to a self-managed superannuation fund (the Fund), and then paid, in part, to the taxpayer.

There was evidence that there were no contributions, as such, made to the Fund and no investments were made by it. There were no trust deed and no rules of membership and eligibility. The Fund had not lodged any income tax or regulatory returns and was never issued with a notice of compliance by the Commissioner. It was no more than a fraudulent enterprise for the withdrawal of superannuation benefits, a vehicle for opening bank accounts to allow the deposit of superannuation benefits into the accounts and for the payment out of those superannuation benefits to participating persons, without meeting a “condition of release” under reg 6.18(1) of the Superannuation Industry (Supervision) Regulations.

The Tribunal made the following findings.

  1. The Fund was not a “superannuation fund”, or a “regulated superannuation fund” or a “complying superannuation fund”. In the circumstances, there had not been a payment by the AON Master Trust to a “superannuation fund”, namely, the Fund.
  2. The payment by the AON Master Trust did not meet any of the compliance requirements of the Superannuation Industry (Supervision) Act 1993 or Regulations.
  3. There was a payment made to the Fund, which was “another person”, at the direction or request of the taxpayer, where the payment was not made to a superannuation fund in circumstances where it could have been a “roll over” or a “transfer”. It was no more than a payment being made to an agent and in these circumstances s 307-15(2)(b) ITAA 1997 applied. The payment was effectively one from the AON Master Trust, of which the taxpayer was a fund member, to the taxpayer himself.
  4. The amount received by the taxpayer was properly assessable income of the taxpayer under s 304-10(1).
  5. No remission of the penalty imposed by the Commissioner was warranted.

Re Brazil and FCT [2012] AATA 192 (Administrative Appeals Tribunal, Senior Member Dunne, 4 April 2012).

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