Sent: 14-03-2012 09:57:03
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More On The Interhealth Federal Court Case
Last week I mentioned a Federal Court case called Commissioner of Taxation v Interhealth Energies Pty Ltd as Trustee of the Interhealth Superannuation Fund  FCA 120 and that I would discuss it in greater detail this week.
The case has come about because of the personal relationship breakdown of a couple. "Their antipathy one for the other was palpable, mutual and enduring," said Judge Logan.
The super fund had invested most of its money in a related unit trust which in turn had invested all of its funds in another unit trust. I'm not privy to all the details of the case but based on the information provided it would appear that these investments breached the In House Asset rules but this doesn't seem to have been an issue thus far in these protracted proceedings. (In fairness perhaps the ATO will get to that matter after this current action has been completed.)
This current Court case came about because the trustee of the fund hasn't acted upon a series of transactions that it had agreed with the Tax Office.
The case also involved the non-payment of trust distributions from the related unit trusts. Justice Logan rejected the super funds argument that it couldn't enforce its rights because the related unit trust didn't have sufficient money.
Justice Logan has made several decisions in relation to the case but has held over making a full range of matters until the parties return to Court to discuss his work thus far. One item he has held over until he takes further submissions is a decision on the compliance status of the fund.
It is extremely annoying that the ATO has had to spend its scarce resources sorting this matter out. It's cases like these that force up regulatory cost.
Yes this is probably an extreme example of what can go wrong. But it's this type of behaviour that will ultimately cause SMSFs credibility problems. It's common amongst larger fund people to hear them say that SMSFs are really just a tax rort and a charade.
This Court case - and any future ones like it - will only add to the impression of SMSFs being right out there in the lawless Wild West.
Version 6.0 of my SMSF book is now available.
You can see all the changes that have been made between Version 5.1 and 6.0 (the latest edition).
You can look at the contents page at the following link: http://www.atcbiz.com.au/r.php?r=0mjd6ne
For details of the changes made from version 5 to version 6 visit: http://www.atcbiz.com.au/r.php?r=d5xcpch
As you'll see from the list there have been many changes.
Two purchase options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST). The book can be purchased at the following link: http://www.atcbiz.com.au/r.php?r=5a4agqb
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