{"id":5430,"date":"2014-12-18T13:11:15","date_gmt":"2014-12-18T02:11:15","guid":{"rendered":"http:\/\/www.dbalawyers.com.au\/?p=5430"},"modified":"2021-04-14T17:40:46","modified_gmt":"2021-04-14T07:40:46","slug":"recent-case-provides-valuable-insights-smsfs","status":"publish","type":"post","link":"https:\/\/www.dbalawyers.com.au\/ato\/recent-case-provides-valuable-insights-smsfs\/","title":{"rendered":"Recent case provides valuable insights for SMSFs"},"content":{"rendered":"
The recent decision of Deputy Commissioner of Taxation v Lyons<\/em> [2014] FCA 1353 provides various insights for self managed superannuation fund trustees, as explained in this article.<\/p>\n On 6 June 2008, the Lyons Family Superannuation Fund (\u2018Fund\u2019) was registered as a self managed superannuation fund. At all relevant times, Mr Lyons and his now former wife, Mrs Lyons, were the trustees and members of the Fund.<\/p>\n Between 1 July 2008 and 3 July 2008, the Fund received rollovers in respect of the members. As at 3 July 2008, the Fund had cash assets of $193,459.44.<\/p>\n At the time the Fund was established, Mr and Mrs Lyons carried on a retail business. The business suffered financial difficulties and Mr and Mrs Lyons ultimately became bankrupt in March 2010.<\/p>\n Prior to their bankruptcy, as a means of supporting the struggling business, Mr Lyons (in his capacity as trustee of the Fund) commenced lending money to his brother-in-law, Mr Ellis. Mr Ellis would then immediately transfer the borrowed sums to the retail business account of Mr and Mrs Lyons. Between the period of 3 July 2008 and 25 May 2009, a total of $190,000 was lent from the Fund to Mr Ellis. None of this $190,000 was recoverable.<\/p>\n Mr and Mrs Lyons were advised by their financial planner that loaning the money is the manner described above was allowable. The judge in the case described this advice as \u2018wrong.\u2019<\/p>\n The matter came to a head in the subsequent financial year when the Fund\u2019s auditor lodged an auditor contravention report in respect of the Fund for the 2009 financial year. This led to an ATO audit \u2014 with which Mr Lyons fully complied \u2014 and ultimately a letter of non-compliance being issued for the Fund in relation to the 2009 financial year. Mr Lyons did not dispute the contraventions or the letter of non-compliance.<\/p>\n The matter was then brought to the Federal Court to determine the appropriate penalties that should be imposed.<\/p>\n The outcome of the matter was that:<\/p>\n Lyons\u2019 case provides the following insights for self managed superannuation fund trustees:<\/p>\n Further, this serves as another reminder that, although increasing in popularity, self managed superannuation funds are not for everyone and potential trustees should be made aware of the added responsibility and risks associated with running such a fund.<\/li>\n (For completeness, the parties to Lyons\u2019 case agreed that the above was not planned as a means of obtaining a taxation benefit, but rather a stroke of luck with respect to timing.)<\/li>\n Lyon\u2019s case provides various insights for self managed superannuation fund trustees. Perhaps most importantly, it serves as a reminder that running an SMSF comes with added responsibility and risk. Trustees are responsible for all relevant administrative and compliance tasks and relying on professional advice is no defence to a contravention. It follows that SMSFs are not for everyone.<\/p>\n SMSFs are primarily for those people who wish to be in control of their financial affairs and who are capable of taking an active role in the management of their fund. People who are not willing to take an active interest in their own financial affairs should consider the possible advantages of leaving their superannuation affairs to professionally managed public offer funds.<\/p>\n * * *<\/p>\n This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional.<\/p>\n The recent decision of Deputy Commissioner of Taxation v Lyons [2014] FCA 1353 provides various insights for self managed superannuation fund trustees, as explained in this article. Facts of decision On 6 June 2008, the Lyons Family Superannuation Fund (\u2018Fund\u2019) was registered as a self managed superannuation fund. At all relevant times, Mr Lyons and [read more<\/a>]<\/p>\n","protected":false},"author":11,"featured_media":5431,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25,95,33,38],"tags":[],"ppma_author":[136],"yoast_head":"\nFacts of decision<\/h3>\n
Outcome<\/h3>\n
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Key lessons<\/h3>\n
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Conclusion<\/h3>\n