Advanced Superannuation And Retirement Planning Case Study 2022

Running head: ADVANCED SUPERANNUATION AND RETIREMENT PLANNING
Advanced Superannuation and Retirement Planning
Name of the Student:
Name of the University:
Author’s Note

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ADVANCED SUPERANNUATION AND RETIREMENT PLANNING
Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................3
Case 2: Australian Securities and Investments Commission v Australian Lending Centre Pty
Ltd (No 3) [2012] FCA 43...........................................................................................................5
Case 3 Deputy Commissioner of Taxation v Rodriguez [2016] FCA 860..................................6
Comparison of the Cases.............................................................................................................7
Conclusion.......................................................................................................................................9
Reference.......................................................................................................................................10

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ADVANCED SUPERANNUATION AND RETIREMENT PLANNING
Introduction
The main focus of the assessment is to ascertain the cases where there has been a breach
of sole purpose tests which has affected the fund management process of a Superannuation fund.
The sole purpose test is a serious test which is followed in maintenance of Superannuation fund
which states that the benefits associated with superannuation fund should be derived by
individuals upon his retirement or his family members in case of death before retirement. It is
considered to be a breach of Sole Purpose test if anyone derives financial benefits when making
investment decisions or other arrangement relating to the superannuation fund1. The discussion
would be dealing with cases where there is a breach of Sole purpose test by the trustee and would
also be discussing the consequence associated with the same. In addition to this, the discussion
would also be including comparison between the legal impact in all the three cases of breach of
sole purpose test. The cases laws would also be showing the verdict which as given by the court
in each case considering the situation and the breach. Further the discussion would also be
showing the tax liabilities and the civil penalties which would be applicable to the trustee for
such a breach.
Discussion
Case 1: Aussiegolfa Pty Ltd (Trustee) v Commissioner of Taxation [2018] FCAFC 122
As per the case, Aussiegolfa Pty Ltd was a trustee of the Benson Family Superannuation
fund for which Mr. Benson was the sole member. The funds which was accumulated from Mr.
Benson’s mother and the superannuation fund of Mr. Benson’s sister and her partner all invested
1 Barnet Jade - Find Recent Australian Legal Decisions, Judgments, Case Summaries For Legal Professionals
(Judgments And Decisions Enhanced)". 2019. Jade.Io. Accessed September 11 2019.

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ADVANCED SUPERANNUATION AND RETIREMENT PLANNING
their funds in DomaCom Fund which was a unit trust and handled investment scheme. The
DomaCom Fund was a special unit trust and the same invested the funds in development of
residential properties so that the business can generate revenue from the same. The money which
was accumulated by DomaCom Fund was used to purchase the property in Burwood. This
property was later leased to Student Housing Australia2. The Student Housing Australia rented
the property to three tenant, two of which was not connected to Mr. Benson. The property was
handed to Student Housing Australia in order to ensure that the property was rented out to
students so that some revenue can be generated from the same. One of the tenant to the property
was Mr. Benson’s daughter and she had to pay the same rent as other tenants at arm’s length
price.
The position which was previously held by the federal court was that:
 The property which was held by DomaCom Fund was an in- house asset
 The court also stated that the trustee had breached the sole purpose test when he had
made an investment for collateral purpose of providing accommodation to the daughter of
the members of the fund3.
Therefore, there was a breach of the sole purpose test which affect the fund management
system and the reason for the breach of the sole purpose test was the renting of the property to
the daughter of the member of the fund. The court was of the opinion that as soon as the property
was rented to the daughter of the member of the super fund, the sole purpose provision was
2 "Legal Database". 2019. Ato.Gov.Au. Accessed September 11 2019. https://www.ato.gov.au/law/view/document?
DocID=LIT/ICD/VID54of2018/00001.
3 "SMSF: The Sole Purpose Test After Aussiegolfa | HLB Mann Judd %". 2018. HLB Mann Judd. Accessed
September 11 2019. https://www.hlb.com.au/smsf-the-sole-purpose-test-after-aussiegolfa-hlb-mann-judd/.

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ADVANCED SUPERANNUATION AND RETIREMENT PLANNING
breached by the trustee4. The case is considered to be of interest due to the fact that the court was
will to consider the Burwood property as in-house asset even though the same is not. In such a
case the breach of sole purpose test would be attracting penalty and charges which needs to be
bear by the trustee of the Fund. In the case which is shown above, the trustee of the business is
Aussiegolfa Pty Ltd which would be held responsible for the breach of the sole purpose test of a
superannuation fund. The breach of sole purpose in a Superannuation fund is considered to be
very important as if there is a breach than it means that the basic purpose for which the
superannuation was established in the first place has not been fulfilled and the fund has been
used for other ancillary purposes5. This also means that the superannuation fund has not been
maintained in an effective manner.
However, it was later held by the court that the company had not breached the sole purpose
test and as per the opinion of the federal court the sole purpose test was not breached as the
trustee could invest in anything for the benefit of the members of the fund. The position of the
court changed in this case. The verdict of the court changed due to the fact that the trustee had
not used the investment fund for his own benefit but for that of its members but in order to do so
had breached the in-house asset regulations and therefore would be subjected to a penalty
amount.
4 Barker, Sarah, Mark Baker-Jones, Emilie Barton, and Emma Fagan. "Climate change and the fiduciary duties of
pension fund trustees–lessons from the Australian law." Journal of Sustainable Finance & Investment 6, no. 3
(2016): 211-244.
5 Raftery, Adrian Michael. "The size, cost, asset allocation and audit attributes of Australian self-managed
superannnuation funds." PhD diss., 2014.

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ADVANCED SUPERANNUATION AND RETIREMENT PLANNING
Case 2: Australian Securities and Investments Commission v Australian Lending Centre
Pty Ltd (No 3) [2012] FCA 43
According to this case, the company called Australian Lending Centre Pty Ltd. was a
lending business which conducted business in the suburbs of Sydney. The main purpose of this
business was to provide loans to people who could not obtain them from the formal way of
obtaining finance like the banks. Until 2005, this company was known as the Sydney Lending
Centre Pty Ltd. which shut down business on a sudden basis. Both these companies were owned
by the same person known as Mr Christopher John Riotto. He had a third company known as
AMR, which was involved in extending finance rather than finance broking like the other two
companies6. The court initially suggested that if a company was involved in providing credit
finance to the entities, then it was to be applicable under a large number of provisions in the
ASIC guidelines. ASIC suggested that there was no liability of ALC and SLC as they had settled
their debts with the respective customers. However, it held that there was a breach under the
ASIC act and that as a regulating authority, it was responsible for mentioning about the same to
the court. This was a part of its responsibility.
The court suggested the following observations in the case:
- As per the ASIC act, the court did not have the required powers to declare that a company
has breached a regulation under the ASIC act. However, it has a general power to make a
binding declaration about a right even if there was no claim was available u/s 21 of the
Federal Court of Australia Act 1976.
6 Bird, Ron, F. Douglas Foster, Jack Gray, Adrian M. Raftery, Susan Thorp, and Danny Yeung. "Who starts a self-
managed superannuation fund and why?." Australian Journal of Management 43, no. 3 (2018): 373-403.

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ADVANCED SUPERANNUATION AND RETIREMENT PLANNING
- It observed that the declaration methods suggested by ASIC were difficult to understand
because of the excessive definitions and technical terms mentioned in it. Hence, the court
asked ASIC to take care of the same.
- The final observation was that ASIC act was concerned with the financial services and
their functioning whereas Trade Practices act was not7. Hence, ASIC could not make a
claim under the Trade practices act to suggest that there was a breach of the regulations
governing under the Trade Practices Act.
Case 3 Deputy Commissioner of Taxation v Rodriguez [2016] FCA 860
The case took place between Mr. Rodriguez, a trustee of the Felix Superannuation fund,
who was responsible for the maintenance of fund and Alison Lendon, who was present in the
court in her capacity of the Deputy Commissioner of Taxation of Superannuation. The basis of
the case was the contraventions of the sections 62(1), 65(1) and 84(1) under the Superannuation
Industry (Superannuation) Act 1993. In the given cases, Mr. Michael Rodriguez, while involved
in giving loans and providing financial assistance to the clients, failed to make sure that Felix
Superannuation fund was solely maintained for the purposes described in section 62(1) of the
Superannuation Industry (Supervision) Act, 1993. Under section 65(1), he failed to ensure that
financial assistance was not provided using the funds of the superannuation fund to others who
were not a part of the fund. In breach of section 196(2) of the act, Mr. Rodriguez failed to
maintain a written record of the plan specifying that the amount of in-house assets of the
company exceeded the market value ratio of 5% at the end of the financial year and the steps
7 "Barnet Jade - Find Recent Australian Legal Decisions, Judgments, Case Summaries For Legal Professionals
(Judgments And Decisions Enhanced)". 2019. Jade.Io. Accessed September 11 2019. https://jade.io/article/260857.

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ADVANCED SUPERANNUATION AND RETIREMENT PLANNING
which were being considered by him to dispose of the excess in-house assets held by the
business8.
The court, in its judgment related to the case held the following observations which it thought
were reasonable in the particular situation:
- All of the contraventions undertaken by Mr. Rodriguez were serious offences under the
Superannuation Act 19993,
- Mr. Rodriguez had to pay a penalty sum of $40000 under the section 196(3) of the 1993
Act due to the contraventions undertaken by him
- Applicants’ costs of $14000 were also to be paid by the defendant.
Comparison of the Cases
The above cases which is shown is related to the superannuation funds which is
maintained to different individuals. The sole purpose test is considered to be an important test in
order to ensure that the super funds in which people have invested are maintained in an
appropriate manner. The sole purpose test ensures that regulated superannuation funds are
maintained for providing benefits to members upon their retirement or to the family members in
case of death. The trustee of the self-managed superannuation fund needs to be manage the fund
in an appropriate manner and also consider the sole purpose test whether the same is appropriate
followed or not. In case, the sole purpose test for the business is appropriately followed by the
trustee that he will be eligible for a 15% tax concession considering the nature of the fund.
However, if the sole purpose test is not followed for the maintenance of the superannuation fund
than the same would be taxed at 45% rate as per the regulations which are established by
Australian Tax office.
8 Liu, K., 2013. Australian superannuation: operational structure, investment performance and trustee governance.

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ADVANCED SUPERANNUATION AND RETIREMENT PLANNING
In case there is a breach of sole purpose test by a trustee for any nature then the trustee
would also be charged with civil liabilities considering the breach. For a breach in sole purpose
test of the superannuation fund, the trustee would be a charged a fine of 60 penalty units
considering the damage. Therefore, it can be established that the sole purpose test in a business is
significantly important for a business to effectively maintain the superannuation un of the
business.
The above cases have a common factor that there is either a breach of sole purpose test
relating to a superannuation fund or there is a breach of in-house asset clause which is also
covered in the superannuation act. As per the case of Aussiegolfa Pty Ltd (Trustee) v
Commissioner of Taxation [2018] FCAFC 122, the sole purpose test is intact and there is no
breach of the same as per the verdict which is provided later by the court. However, the in-house
action test for the superannuation fund was at breach.
The in-house rules which are established by a business in relation to superannuation fund
are listed below:
 lending or leasing more than 5% of the SMSF’s total assets to a related party of the
SMSF; and
 investing more than 5% of the SMSF’s assets in a related party of the SMSF.
In the case of Assiegolfa, the lending for the SMSF assets was around 7.83% and therefore,
there was a breach in the agreement which would be attracting penalties for not maintain the
SMSF in accordance with the law and affecting the compliance with in-asset regulations.
Similarly, in the case of Deputy Commissioner of Taxation v Rodriguez [2016] FCA 860, the
court had provided the verdict that there was a breach of the in-house asset regulation which also

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ADVANCED SUPERANNUATION AND RETIREMENT PLANNING
suggested that the trustee had not complied with the rules and regulations which are established
in the superannuation Act. Therefore, in this case as well, the trustee would be entitled to face
penalty as per the verdict which is given by the court. Therefore, the cases above makes it clear
that the trustee needs to comply with all the regulations which are set by Superannuation Act and
especially the sole purpose test while managing a Superannuation fund.
Conclusion
The above discussion deals with the rules and regulations which are established in a
superannuation fund and also the importance of the sole purpose test while managing a
Superannuation fund. The discussion also shows three different cases which is related to
superannuation fund and provisions which are applicable to the same. The discussion further
states the importance of the sole purpose clause and what are the consequences of breach of the
sole purpose test. In addition to this, the discussion also makes comparison between the three
case laws in order to identify any similarities which might exist in all of them and further the
verdict which was provided by court is also stated individually in the cases laws provided. In
addition to this, regulations of in-house assets is also discussed along with the tax liabilities and
civil penalty which would be faced by the business in case there is a breach in the sole purpose
test or in-house asset test for the super fund.
Reference

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ADVANCED SUPERANNUATION AND RETIREMENT PLANNING
Barker, Sarah, Mark Baker-Jones, Emilie Barton, and Emma Fagan. "Climate change and the
fiduciary duties of pension fund trustees–lessons from the Australian law." Journal of
Sustainable Finance & Investment 6, no. 3 (2016): 211-244.
Barnet Jade - Find Recent Australian Legal Decisions, Judgments, Case Summaries For Legal
Professionals (Judgments And Decisions Enhanced). 2019. Jade.Io. Accessed September 11
2019.
Barnet Jade - Find Recent Australian Legal Decisions, Judgments, Case Summaries For Legal
Professionals (Judgments And Decisions Enhanced). 2019. Jade.Io. Accessed September 11
2019. https://jade.io/article/260857.
Bird, Ron, F. Douglas Foster, Jack Gray, Adrian M. Raftery, Susan Thorp, and Danny Yeung.
"Who starts a self-managed superannuation fund and why?." Australian Journal of
Management 43, no. 3 (2018): 373-403.
Legal Database. 2019. Ato.Gov.Au. Accessed September 11 2019.
https://www.ato.gov.au/law/view/document?DocID=LIT/ICD/VID54of2018/00001.
Liu, K., 2013. Australian superannuation: operational structure, investment performance and
trustee governance.
Raftery, Adrian Michael. "The size, cost, asset allocation and audit attributes of Australian self-
managed superannnuation funds." PhD diss., 2014.
SMSF: The Sole Purpose Test After Aussiegolfa | HLB Mann Judd %". 2018. HLB Mann Judd.
Accessed September 11 2019. https://www.hlb.com.au/smsf-the-sole-purpose-test-after-
aussiegolfa-hlb-mann-judd/.