Issue
Has a contravention of section 65 of the Superannuation Industry (Supervision) Act 1993 (SISA) occurred where money payable to the self managed superannuation fund (SMSF) was unintentionally deposited into the trustee's personal bank account?
Decision
No. A contravention of section 65 of SISA will have occurred if the trustee intended to borrow the money for his or her personal use.
Facts
A share broker, accustomed to receiving instructions from the trustee in both, his personal capacity, as well as in his capacity as trustee of an SMSF, inadvertently made all cheques payable to the member.
The cheques were deposited into the trustee's personal bank account.
The cheques were due to be paid to the SMSF and not to the trustee in his personal capacity.
The trustee has on several occasions, deposited money belonging to the SMSF into his personal bank account.
Reasons for Decision
Section 65 of SISA prohibits the trustee of a regulated superannuation fund from lending money to a member of the fund or a relative of a member of the fund.
However paragraph 52(2)(g) of SISA places trustees under a covenant to keep the money and other assets of the superannuation fund separate to those of the trustee personally (among others). A breach of a covenant may result in an action for loss or damage that occurred as a result of the contravention. This paragraph was inserted on 14 February 2003 Note, when a trustee becomes aware of (or should have become aware of) such an error, the trustee should immediately take steps to rectify the situation. Where the trustee fails to rectify such an error immediately on becoming aware of the error (or should have become aware of the error), they will be considered to have made a loan and have contravened section 65 of SISA.
Amendment History
Date of amendment Part Comment 14 February 2014 Reasons for Decision Updated for clarity Legislative References Updated
Date of amendment | Part | Comment
14 February 2014 | Reasons for Decision | Updated for clarity
Legislative References | Updated