Documentation, Financial Planning

Specialist advice can create defence shield

Specialist smsf advice shield

Specialist SMSF advice can act as a defence against claims a trustee has breached their obligations, but only where that advice is appropriate and relevant.

SMSF trustees who have sought specialist advice will have a solid defence against claims from the ATO that they have failed to meet their obligations, but only where the advice was relevant to the fund, according to a barrister involved with the Marsella case.

Greens List barrister Bill Orow said written advice would always be viewed favourably because it showed a trustee had taken their obligations seriously and in circumstances where they have relied on that advice, it shows they have acted reasonably and not with recklessness or dishonesty.

“If they took steps to get advice, it is very difficult for the regulator to say they have not acted properly in the circumstances, because what else could you expect someone in their position to do given the complexity of the legislation,” Orow said during a presentation at the Smarter SMSF Virtual Day 2021 today.

“One would expect, in those circumstances, that it is pretty much all a reasonable person could have done and allegations of dishonest intent could be negated and a defence of reasonable mistake and reasonable reliance come into play.

“In addition to that, there is a further defence under section 323 [of the Superannuation Industry (Supervision) (SIS) Act], which states there is a defence if the defendant establishes the contravention was due to reasonable reliance on information supplied by another person or the contravention was the result of an accident or some other cause beyond the defendant’s control and they took reasonable precautions and exercised due diligence to avoid the contravention.”

The Melbourne-based barrister said it was also more likely that where a trustee had obtained properly drafted, written professional advice and acted on it, but failed to comply with the SIS Act, the ATO commissioner and the courts would be more forgiving and may waive penalties.

He noted, however, that specialist advice related to superannuation and SMSFs was the key and this had been proven in the case of Wareham v Marsella [2020] VSCA 92 where the court of appeal questioned whether the parties had obtained advice and whether the advice was that of a specialist in the field of super.

“It is not advice you get from any lawyer or accountant; they need to be someone who holds themselves out as someone that possesses a special skill and expertise in the field of superannuation,” he said.

“There was advice provided to the trustee [in the Marsella case], but the court asked: ‘How do we know the person who gave that advice was a specialist in superannuation?’ The court said it had not been proved the trustee had obtained specialist advice, just that they had obtained advice.

“So, if you go to a superannuation specialist of any kind, it needs to made clear that person possesses that special skill and expertise so the advice they give is specialised.”

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