Miranda Brownlee writes an article for the website SMSF Adviser wherein she talks about the potential danger of bypassing laws of superannuation or taxation, especially where a relative is involved. The case which highlighted the possible threat of bending Super/taxation rules involves Payne v Commissioner of Taxation.
Super Guarantee compliance
Carol Watson, ex-spouse of James Payne, complained to the ATO in regards to the Super Guarantee obligations of her spouse and why she thinks he missed on following compliance protocols. On auditing the compliance of Mr. Payne, the ATO found discrepancies. The ATO commissioner then forwarded a notice to Mr. Payne that talked about 15 SGC default assessments pertaining to Qs ended 30th Sep 2004 to 31st March 2008.
Payne v Commissioner of Taxation
Mr. Payne, employer and husband, attempted to justify that the payment of wages was the duty of the employee, in this case, the spouse, Mrs Watson. Because they were in a relationship, he somehow afforded to think less of the obligations involved.
(Super) Implications of broken relationships
It is not a one-off case. Such cases are being witnessed more frequently now that spouses have become more aware of the Super Guarantee payments. To add, SG audits are probing more regularly into the Super compliance implications of broken relationships. The ATO has often had to take tough stances after getting information from spouses holding grudges.
It will be wise to note that the laws apply just as much as when we are in a relationship. There is another takeaway: given the probability of a relationship breaking up, why would any spouse act foolishly and bypass taxation/Super rules only to be exposed to the ATO by an ex-spouse with a grudge acting as a whistle-blower?
You can read the original article here.
Compliance protocols need to be taken very seriously. When we set up our Supers in general or SMSFs in particular, our aim should not be restricted to our investment strategy and portfolio building but should also extend itself to compliance. While the ATO is keen to educate (case in point being the various webinars it hosts), it has boldly suggested that compliance contraventions will have consequences. And it is worth noting that the new penalty regime has set stiffer terms for the Super investors.