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The Administrative Appeals Tribunal has affirmed the Commissioner’s decision to include the amount of a superannuation rollover, requested by the taxpayer, in the taxpayer’s assessable income, despite the fact that the amount was rolled over to a fraudulent fund and some of the money was lost. The penalty imposed by the Commissioner was, however, remitted in full.

The taxpayer was an employee who had been made redundant. He was told, by a new acquaintance, that he could withdraw his superannuation benefit early, subject to a fee of 29% of the amount paid out. The taxpayer did not satisfy any of the factors which would entitle him to an early withdrawal of his superannuation.

At the taxpayer’s request, his fund rolled over his benefit to another complying fund, pursuant to a rollover request form which proved to be fraudulent. The money was paid into a bank account which did not belong to the recipient fund, but which, unknown to the fund’s trustees, had been established for fraudulent purposes.

The taxpayer ultimately received his benefit, less the 29% “fee”.

On these facts, the Tribunal held that the full amount of the benefit was properly included in the taxpayer’s assessable income under s 304-10(1) of the Income Tax Assessment Act 1997, which provides that assessable income includes the amount of the superannuation benefit received from, or attributable to, the assets of a complying superannuation fund in circumstances where the benefit has been received otherwise in accordance with payment standards prescribed under s 31(1) of the Superannuation Industry (Supervision) Act 1993 (Cth).

The Tribunal considered that the 25% penalty imposed by the Commissioner was appropriate. The Tribunal, however, accepted that the taxpayer “has suffered greatly and disproportionately in the circumstances where he is culpable only of pronounced naivety, unaccompanied by duplicitous intentions.” The penalty should be remitted in full.

Re Vuong and FCT [2014] AATA 402 (Dr Gordon Hughes, Member, 23 June 2014).

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