On 19 July 2018, the deputy commissioner of taxation commenced proceedings against the corporate trustee of an SMSF, the Mai Superannuation Fund.

On 24 October 2018, an order was made to wind up the corporate trustee of the fund, The Mai Tai Family Pty Ltd, under the Corporations Act 2001.

The application to wind up the corporate trustee by the deputy commissioner of taxation as a creditor of the defendant was based on a statutory demand on 20 September 2018 claiming a tax debt of $304,004.68.

According to the judgment, the ATO then subsequently lodged a proof of debt dated 19 November 2018 in the liquidation of the defendant claiming a debt in the amount of $465,472.72. The proof of debt related to income tax and a running balance account deficit debt in respect of BAS amounts.

The ATO had audited the defendant’s activities and prepared a position paper with respect to the defendant dated 11 March 2016. The ATO found that there had been a number of contraventions of provisions of the SIS Act.

Following this earlier order, the liquidator in this case sought directions under section 90-15 as to how he should proceed in circumstances where the defendant is a disqualified person pursuant to section 120(2)(e) of the Superannuation Industry (Supervision) Act 1993 (Cth) (the SIS Act) and, in particular, whether it would be appropriate for the defendant to resign from its position as the trustee of the Mai Superannuation Fund.

In addition, the liquidator sought an order under section 57(1) of the Federal Court of Australia Act that he be appointed, without security, as receiver and manager of the property of the trust, including all funds held with Westpac Banking Corporation in two accounts in the name of the defendant as trustee for the Mai Superannuation Trust.

The judgment noted that section 126K of the SIS Act provides that a person commits an offence if the person is a disqualified person and is or acts as a trustee of a superannuation entity.

The SIS Act, it said, does not provide that upon becoming a disqualified person, the defendant ceases to be the trustee of the superannuation fund. If it acts as a trustee, it commits an offence.

The liquidator in this case had concerns that, as a liquidator of a company which acts as a trustee, it may be liable as an accessory.

In his judgment, Justice Besanko noted that the trust in this particular case also created difficulties as it stated that there must be a trustee of the fund at all times. The liquidator pointed out that it was unlikely any person would step in to replace the defendant in this case.

The rules also stated that the trustee of the fund may appoint a new trustee provided the fund remains a complying SMSF, including a replacement trustee or an additional trustee.

The rules provided that a trustee was to be removed as a trustee under a number of conditions, including “if the trustee is prohibited from being a trustee under the superannuation laws or where the regulator otherwise determines, including where the trustee is a disqualified person”.

“The difficulty in this case is the rule provides that the trustee is to be removed, not is removed. The liquidator is also concerned that any action to appoint a new trustee might itself contravene [section] 126K of the SIS Act,” stated Justice Besanko.

“In the circumstances as I have outlined them, it is appropriate to make the first order sought by the liquidator.”

The court decided that it would be appropriate for The Mai Family Pty Ltd to resign from its position as trustee of the Mai Superannuation Fund.

It also ordered that the liquidator be appointed, without security, as receiver and manager of the property of the trust.