The Federal Court today handed down penalties amounting to $257,000 against Adelaide accountant Anthony Philip Holloway, and his firm, for carrying out a scheme to avoid the in-house assets provisions of the Superannuation Industry (Supervision) Act 1993 (the SIS Act).
Justice Mansfield, in handing down the penalty decision, said, "I have particular regard to the need to fix penalties of sufficient magnitude to deter each of the respondents from any further conduct contravening the Act, and to signify to the community at large the serious consequences which may flow from contraventions of s85 of the SIS Act, so as to deter others who are trustees of, or advisors to, regulated superannuation funds from engaging in such conduct."
The court had previously ruled that Holloway had operated a scheme for his clients whereby a business would make a contribution to a superannuation fund, which would "invest" the money into a unit trust. While the unit trust supposedly had an arms length trustee, in fact, the business principals controlled its operations. The unit trust would then send the money back to the business. The Federal Court ruled that Holloway had carried out the scheme in relation to 18 such "round robin" transactions.
The action, the first of its type taken under the legislation, was a test case by the Australian Prudential Regulation Authority (APRA) against Holloway and his firm, Holloway & Co, of Pennington Terrace, North Adelaide.
APRA Senior Manager Roger Brown said today, "This is a clear warning for accountants who promote schemes to avoid the application of the SIS Act, for trustees who engage such accountants and for auditor who audit the funds."
"Superannuation funds are limited in the amount they can invest in the employer. This is designed to prevent fund members from losing their retirement savings, as well as their jobs, if the employer gets into financial difficulties.
"The trustees of the funds involved in this matter have also paid a high price for their involvement with Mr. Holloway. Many funds lost their taxation concessions for the years they were involved in the scheme and are now also faced with paying the cost of reconstructing the affairs of their funds. Trustees must always remember that they are ultimately responsible for the management of superannuation funds. It is not enough to say you relied on bad advice."
"APRA is also taking action against the auditors who failed to report the contraventions of the SIS Act involved in these transactions and signed unqualified audit certificates."
For further information contact:
Gloria Peterson
Public Affairs Manager
02 9210 3385
