A company was having financial difficulties so the director borrowed from his self-managed superannuation fund (“Fund”). In due course, the company repaid the loan with interest believing that he was doing the right thing. The auditor noted the breach of the Superannuation (Industries and Supervision) Act 1993 and as required, reported the breach to the ATO. The ATO warned the director of the consequences if the breach was repeated.
The company director did repeat the transaction twice. Again, the auditor reported the transactions. The ATO warned him of the consequences of the breach for a second time. On the third time, the Fund was declared non-complying. The options for Fund were to:
- wind the fund up, rolling over all member benefits to a to a fund that is not a self-managed superannuation fund; or
- appoint a RSE licensee as trustee of the Fund.
The Fund had an investment in a unit trust which had substantial landing holdings.
Cleary Bentley was instructed to review the ATO’s position and take the appropriate action.
After discussions with the director of the company and with the accountant’s assistance, Cleary Bentley negotiated the appointment of a RSE licensee. This protected the Fund’s investments in the properties within the unit trust by having its trustee retained to control the investments.