Commissioner of Taxation v Douglas et al
The Federal Court of Australia dismissed two appeals and allowed another in three cases appealed by the Commissioner of Taxation regarding whether superannuation invalidity benefits were superannuation lump sums or superannuation income stream benefits within the meaning of the Income Tax Assessment Act 1997 (Cth) for taxation reasons.
Two of the payments in question were made under the Military Superannuation and Benefits Act 1991 (Cth) and one under the Defence Force Retirement and Death Benefits Act 1973 (Cth).
Reported in Super News - Edition 48 / 10 December 2020 - Commissioner of Taxation v Douglas et al  FCAFC 220 (4 December 2020)
Federal Court of Australia – ASIC v Helou
The Federal Court of Australia has granted leave to a director, Gary Helou, of the corporate trustee of a SMSF to be able to continue as a director of that and other private companies after he was disqualified from managing corporations for 3 years.
The court found that Mr Helou is required by superannuation legislation to remain a director of trustee in order for the fund to continue to meet the definition of a self-managed superannuation fund and that if Mr Helou were not to remain a director but retain his interest in the fund:
- the fund would become “non-compliant”
- would be liable to have its taxable income taxed at the top marginal tax rate, rather than at 15% would be subject to the Australian Taxation Office issuing rectification or education directions.
- Mr Helou would need to move his superannuation out of the Fund to a public fund, which would likely result in administrative costs, financial losses consequent on selling down assets in the Fund at an inopportune time and possibly a capital gains tax event.
Reported in Super News - Edition 45 / 19 November 2020 - Australian Securities and Investments Commission v Helou (No 2)  FCA 1650 (13 November 2020)
Etmekdjian and Commissioner of Taxation
The Administrative Appeals Tribunal has affirmed a decision to disqualify a Artin Etmekdjian from being a trustee of a self-managed superannuation fund following his conviction for dishonestly influencing a Commonwealth public official.
Mr Etmekdjian sought to have the decision overturned on the basis that the disqualification was not the product of a conviction for an offence involving serious dishonesty. His application was, however, not made within the required fourteen days of his conviction and the Tribunal found there were no exceptional circumstances that prevented Mr Etmekdjian from making the application within the required time frame.
Reported in Super News - Edition 39 I 8 October 2020 - Etmekdjian and Commissioner of Taxation (Taxation)  AATA 3821 (1 October 2020)
Federal Court of Australia - Brown v Hannover Life Re of Australasia Ltd
The Federal Court of Australia has ruled in favour of an insurance payout recipient and ordered the insurer to pay an additional amount, covering interest, for the period of time the Court found it was unreasonable to withhold the original payment. The Court, however, found that interest was only payable for a period of just over three months rather than the, just over, two years claimed.
Reported in Super News - Edition 38 / 1 October 2020 - Brown v Hannover Life Re of Australasia Ltd  FCA 1391 (28 September 2020)
Administrative Appeals Tribunal – Berges and Secretary, Department of Social Services
The Administrative Appeals Tribunal has affirmed a decision of the Tribunal not to grant an extension of time to lodge the income tax returns of Mrs Berges and her partner for the 2015-2016 financial year.
Mrs Berges and her partner were eligible for Family Tax Benefits of $18,442.74 but were not entitled to some $7,733.58 due to the late lodgement of personal and SMSF tax returns. The Tribunal found that the cause of the applicant’s failure to lodge the tax returns by the deadline was not special circumstances, it was that she and her partner did not give sufficient weight to timeliness in relation to the requirement that their tax returns needed to be submitted by 30 June 2017 for FTB purposes.
Reported in Super News - Edition 35 / 10 September 2020 - Berges and Secretary, Department of Social Services (Social services second review)  AATA 3507 (11 September 2020)
Federal Court of Australia – ASIC v MLC Nominees Pty Ltd
The Federal Court of Australia, following admitted contraventions of the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth), has imposed penalties on MLC Nominees Pty Ltd and NULIS Nominees (Australia) Limited.
MLC Nominees will pay a pecuniary penalty of $22.5 million for its contraventions of s 12DB of the ASIC Act in respect of no-adviser members and a penalty of $27 million for its contraventions of 12DB in respect of linked members. NULIS will pay a pecuniary penalty of $8 million for its contraventions of s 12DB in respect of linked members.
AATA – Farag and Farag and Secretary, Department of Social Services
The Administrative Appeals Tribunal has affirmed a Tribunal decision from 2019 in which Centrelink reduced the age pension payable to a couple after they had transferred their account-based pensions from one superannuation fund to another. The transfer meant that the new pension accounts were not eligible for grandfathered treatment under the asset test and were subject to the deeming provisions of the Social Security Act 1991. The Tribunal noted that the circumstances of the applicants were “difficult” but the Tribunal had no discretion to take a different approach than otherwise mandated by the legislation.
Reported in Super News - Edition 32 / 10 September 2020 - Farag and Farag and Secretary, Department of Social Services (Social services second review)  AATA 2961 (17 August 2020)
Administrative Appeals Tribunal of Australia – Gilliland and ASIC
The Administrative Appeals Tribunal of Australia has set aside a decision which disqualified John William Gilliland from being an approved SMSF auditor.
Mr Gilliland had acted as auditor to a fund of which he was member, albeit holding what he believed was an immaterial interest which did not disqualify himself from performing the fund’s audit.
The Tribunal accepted that the applicant had held a genuine but erroneous belief for a period of time that he was entitled to conduct the audits and noted that there was no evidence that the audit was in any fashion dishonest.
Reported in Super News - Edition 31 I 13 August 2020 - Gilliland and Australian Securities and Investments Commission  AATA 2660 (5 August 2020)
G v G (No. 2) – Supreme Court of NSW
The Supreme Court of NSW has made orders confirming the powers of the NSW Trustee to invest, or authorise the investment of, a protected estate in a Regulated Superannuation Fund.
The orders were sought after doubt arose as to whether the investment by the NSW Trustee, as trustee of the protected estate, into a superannuation fund is an “investment” of trust property because the trustee has thereby divested itself of trust property, loses control of that property and puts the property beyond the protective control of the Court.
Reported in Super News - Edition 29 / 30 July 2020 - G v G (No. 2)  NSWSC 818 (1 July 2020)
Dental Corporation Pty Ltd v Moffet – Federal Court of Australia
The Full Federal Court of Australia has heard an appeal to a 2019 case and upheld a finding that a Dentist, who had sold his practice but kept working for the purchaser, was eligible for superannuation guarantee contributions.
The Court also upheld findings that the dentist was not an employee in relation to his claim for accrued annual and long service leave.
Reported in Super News - Edition 29 I 30 July 2020 - Dental Corporation Pty Ltd v Moffet  FCAFC 118 (16 June 2020)
Hohnen v Hopkins – District Court of Western Australia
The District Court of Western Australia has dismissed a claim for damages for losses suffered as a result of tax advice given by former accountant.
The Judge found that the plaintiffs had not satisfied the Court that on the balance of probabilities that the advice was given.
Reported in Super News - Edition 29 / 30 July 2020 - HOHNEN -v- HOPKINS  WADC 98 (2 July 2020)
Sutton v NRS(J) Pty Ltd – NSW Supreme Court
The NSW Supreme Court has “re-instated” a trust after the original Trust Deed could not be located and only a photocopy of what was presumed to be the original could be found.
The Court gave advice under the Trustee Act 1925 (NSW) to enable the trustees to treat the photocopy Trust Deed as the Trust's constituting document.
Reported in Super News - Edition 29 / 30 July 2020 - Sutton v NRS(J) Pty Ltd  NSWSC 826 (26 June 2020)
NSW Supreme Court – Various v Moylan Retirement Solutions Pty Ltd (and others)
Four self-managed superannuation funds have failed in three separate actions (heard together) against Moylan Retirement Solutions Pty Ltd. The SMSFs all advanced funds into various loan investments and corporate investment vehicles controlled by Mr Moylan which were in turn applied, on Mr Moylan’s advice, to other investment vehicles that mostly conducted property development and land subdivision.
These investment vehicles failed as a result of the global financial crisis and became worthless.
One of the funds also commenced action against Mr Moylan’s PI insurer.
The Court found in favour of all defendants noting, however, that all plaintiffs were “entirely to be believed that they were the innocent victims of Mr Moylan’s calculated deception over several years” and that “Mr Moylan’s grave misconduct left them suffering a grievous financial plight” but “the law does not provide them with a remedy against these particular insurer defendants”.
The Court did make findings of serious misconduct against Mr Moylan and has referred its judgment to the Attorney General of New South Wales to investigate whether breaches of law have occurred by Mr Moylan, which may result either in criminal or other regulatory prosecution against him.
Reported in Super News - Edition 19 / 21 May 2020 - Esined No. 9 Pty Limited v Moylan Retirement Solutions Pty Ltd; P&S Kauter Investments Pty Ltd ATF the Kauter Superannuation Fund v Moylan Retirement Solutions Pty Ltd; Graeme Manning v Arch Underwriting At Lloyds Limited on Behalf of Syndicate 2012 (No. 2)  NSWSC 359 (8 May 2020)
Federal Court of Australia – Felix v NULIS Nominees (Australia) Ltd
The Federal Court of Australia has dismissed an appeal over a determination by the Superannuation Complaints Tribunal that dismissed a fund member’s total and permanent disability claim on the basis that the member did not satisfy the two tests required to qualify for total and permanent disablement under the policy terms and conditions.
Reported in Super News - Edition 17 / 7 May 2020 - Felix v NULIS Nominees (Australia) Ltd  FCA 591 (4 May 2020)
Supreme Court of Victoria – Wareham v Marsella
The Supreme Court of Victoria, Court of Appeal, has dismissed an appeal by two ex-trustees of a self-managed superannuation who were removed by the court previously when they were found to have not considered the interests of dependants of the fund’s deceased member when distributing death benefits.
The appellants cited ten grounds on which the Court incorrectly removed them as trustees of the fund. The majority of arguments were directed at the trial judge’s conclusion that the trustees failed to give real and genuine consideration to the interests of those who might potentially benefit from the exercise of the discretion regarding payment of the death benefit.
Reported in Super News - Edition 15 / 23 April 2020 - Wareham v Marsella  VSCA 92 (20 April 2020)
Federal Court of Australia – QSuper Board v Australian Financial Complaints Authority Limited
The Federal Court of Australia has rejected an appeal by QSuper that AFCA “impermissibly exercised the judicial power of the Commonwealth” in finding that a QSuper member was entitled to a refund of insurance premiums due to him being eligible to pay a lower premium on the basis that he fell within a new rating category.
The Federal Court upheld AFCA’s decision in finding in favour of the fund member.
Reported in Super News - Edition 14 / 16 April 2020 - QSuper Board v Australian Financial Complaints Authority Limited  FCAFC 55 (9 April 2020)
Supreme Court of Queensland – Investors Exchange Limited v Australian Financial Complaints Authority Limited.
The Supreme Court of Queensland has found against an application by Investors Exchange to overturn a decision by AFCA relating to substantial loss of capital by an investor in one of Investors Exchange’s unlisted managed investment scheme.
The SMSF investor lost over 90% of their investment and lodged a complaint with the Financial Ombudsman Service Ltd (a predecessor of AFCA) which found that Investors Exchange had failed to comply with its compliance plan which included not obtaining independent valuations and that these failures caused the SMSF to suffer loss.
The Court ordered that Investors Exchange pay the SMSF $66,115 plus with interest calculated at 1.5 per cent per annum (compounding annually) from 24 November 2015 to the date of payment.
Reported in Super News - Edition 14 / 16 April 2020 - Investors Exchange Limited v Australian Financial Complaints Authority Limited & Anor  QSC 74 (9 April 2020)