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Deputy Commissioner of Taxation (Superannuation) v. Lyons

[2014] FCA 1353

Deputy Commissioner of Taxation (Superannuation)
v. Lyons

Court:
Federal Court of Australia

Judges:
BENNETT J

Subject References:
SUPERANNUATION
penalties
agreed facts
Superannuation Industry (Supervision) Act 1993 (Cth) ss 62, 65, 84 and 109
regulated superannuation fund
self-managed superannuation fund
in-house assets
related party
seriousness of contraventions
reasonable reliance on information supplied by another person

Legislative References:
Superannuation Industry (Supervision) Act 1993 - 62; 65; 84; 109

Case References:
ACCC v Energy Australia Pty Ltd - [2014] FCA 336
ACCC v Flight Centre (No 3) - [2014] FCA 292
ACCC v Qantas Airways Limited - [2008] FCA 1976
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith - (2008) 165 FCR 560
Australian Prudential Regulatory Authority v Derstepanian - [2005] FCA 1121
Barbaro v The Queen; Zirilli v The Queen - [2014] HCA 2
Clean Energy Regulator v MT Solar Pty Ltd - [2013] FCA 205
Global One Mobile Entertainment Pty Ltd v ACCC - [2012] FCAFC 134
Markarian v The Queen - (2005) 228 CLR 357
Mornington Inn Pty Ltd v Jordan - (2008) 168 FCR 383
NW Frozen Foods Pty Ltd v ACCC - (1996) 71 FCR 285
Olesen v Eddy - [2011] FCA 13
Olesen v MacLeod - [2011] FCA 229
Raelene Vivian, suing in her capacity as Deputy Commissioner of Taxation v Robert Burley Fitzgeralds - [2007] FCA 1602
Trade Practices Commission v CSR Ltd - [1990] FCA 521

Judgment date: 12 December 2014

Sydney


THE COURT DECLARES THAT:

1. Mr Lyons, as a trustee of the Lyons Family Superannuation Fund (Fund) caused the Fund:

(a)
On 3 July 2008 to lend to Paul Ellis, a relative of Mr Lyons, the sum of $35,000 from the Fund without authorisation of the governing rules of the Fund;
(b)
On 7 July 2008 to lend to Paul Ellis, a relative of Mr Lyons, the sum of $50,000 from the Fund without authorisation of the governing rules of the Fund;
(c)
On 7 July 2008 to lend to Paul Ellis, a relative of Mr Lyons, the sum of $15,000 from the Fund without authorisation of the governing rules of the Fund;
(d)
On 21 July 2008 to lend to Paul Ellis, a relative of Mr Lyons, the sum of $20,000 from the Fund without authorisation of the governing rules of the Fund;
(e)
On 10 October 2008 to lend to Paul Ellis, a relative of Mr Lyons, the sum of $20,000 from the Fund without authorisation of the governing rules of the Fund; and
(f)
On 25 May 2009 to lend to Paul Ellis, a relative of Mr Lyons, the sum of $50,000 from the Fund without authorisation of the governing rules of the Fund.

2. By way of the conduct set out above in (1), Mr Lyons contravened:

(g)
Section 62 of the Superannuation Industry (Supervision) Act 1993 (Cth) (Act) by failing to ensure that the Fund was maintained solely for one or more of the purposes prescribed in s 62(1) of the Act, instead maintaining the Fund for the purpose or significant purpose of making back-to-back loans to provide working capital for Mr Lyons' retail business.
(h)
Section 65 of the Act by lending money using the assets of the Fund to a relative of Mr Lyons, who was a member of the Fund.
(i)
Section 84 of the Act by failing to take all reasonable steps to ensure that the provisions of Division 2 and Division 3 of the Act were complied with in respect of the Fund, instead making loans to a relative of a member which caused the market value ratio of the Fund's in-house assets to exceed 5% and failing to prepare a plan setting out steps to ensure the disposal of in-house assets in excess of the 5% limit.
(j)
Section 109 of the Act by making investments in his capacity as trustee of the Fund in circumstances where Mr Lyons and the other parties to those transactions failed to deal with each other at arm's length in respect of each transaction, or the terms and conditions of those transactions were more favourable to the third party than those which it is reasonable to expect would have applied if the trustee was dealing with that third party at arm's length in the same circumstances.

AND BY CONSENT THE COURT ORDERS THAT:

3. In respect of the contraventions of the Act relating to the making of the six loans to a relative of a member of the Fund, the respondent pay a monetary penalty under s 196 of the Act in the sum of $32,500.

4. The respondent pays the applicant's costs of and incidental to this proceeding fixed in the sum of $5,000.

5. The respondent pay the monetary penalty and legal costs referred to in orders 3 and 4 in equal monthly instalment over a period of 36 months, being the sum of $1,041.67 per month.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.