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ATO Interpretative Decision

ATO ID 2002/977 (Withdrawn)

Superannuation

Retirement income entities - Individual trustees of a Self managed superannuation fund (SMSF) declared bankrupt.
FOI status: may be released
  • This ATO ID is withdrawn as it does not accurately reflect the ATO view.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Can disqualified persons continue to act as trustees of a SMSF?

Decision

No. Subsection 121(1) of the Superannuation Industry (Supervision) Act 1993 (SISA) prohibits a disqualified person from being a trustee of a fund.

Facts

All trustees of the SMSF are individuals

All trustees of the SMSF are undischarged bankrupts.

Reasons for Decision

Under paragraph 120(1)(b) of the SISA, an individual is a disqualified person by

reason of being 'insolvent under administration'.

The term 'insolvent under administration' is defined in subsection 10(1) of the SISA to include a person who is an undischarged bankrupt under the Bankruptcy Act 1966.

Under subsection 121(1) of the SISA , a disqualified person is prohibited from being a trustee of a fund.

As all of the trustee/members are disqualified persons, they must resign as trustees of the fund and consequently the fund would cease to be an SMSF as defined by s17A of the SISA.

Date of decision:  9 November 2001

Year of income:  30 June 2001

Legislative References:
Superannuation Industry (Supervision) Act 1993
   Subsection 10(1)
   Section 17A
   Subsection 121(1)
   Paragraph 120(1)(b)

Keywords
Self managed superannuation funds
SMSF trustee
SMSF control of trust

Business Line:  Superannuation

Date of publication:  23 October 2002

ISSN: 1445-2782

history
  Date: Version:
  9 November 2001 Original statement
You are here 31 March 2006 Archived

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