AAT rejects trustee disqualification appeal

The Administrative Appeals Tribunal (AAT) has upheld an ATO decision to disqualify an individual from acting as an SMSF trustee due to multiple serious breaches of superannuation law.

The ruling was made on 19 July in the case of Coronica and Commissioner of Taxation [2024] following an appeal by the applicant against the disqualification initially imposed by the ATO.

Specifically, the regulator disqualified Giuseppe Coronica on 5 September 2018 for multiple contraventions of the Superannuation Industry (Supervision) (SIS) Act. It alleged Coronica had transferred shares from his own company to his SMSF at an undervalued price on 7 April 2009, breaching section 66(1) of the SIS Act, which prohibits the deliberate acquisition of assets from a related party of the fund.

Additionally, it alleged Coronica breached section 65(1) by lending money from his SMSF to himself from 2009 to 2014, in addition to failing to meet the sole purpose test under section 62(1) because he used the fund’s assets and resources for his personal financial benefit rather than for retirement purposes.

Following the ATO’s disqualification decision in 2018, Coronica sought a review by the AAT, which initially set aside the disqualification in 2021. However, the ATO appealed this decision, and in February 2022, the Federal Court remitted the case back to the tribunal for a fresh determination.

During the latest appeal, Coronica referenced the Merchant case to argue his own disqualification was similarly unwarranted, suggesting his situation was comparable as he had claimed he posed no future compliance risk.

However, the AAT found significant differences between the two cases, notably Coronica’s breaches were more numerous and deliberate and he did not rely on external advice. It concluded the circumstances of the Merchant case did not apply to Coronica’s situation and therefore his disqualification was affirmed.

In handing down her judgment, AAT senior member Gina Lazanas stated: “The tribunal cannot be satisfied on the balance of probabilities that Mr Coronica does not present a future compliance risk and will not deviate again from the standards required of him as a trustee of a superannuation fund, even if the undertakings were accepted.

“This is especially the case as Mr Coronica was reluctant to unconditionally accept responsibility for the contraventions of the SIS Act. While Mr Coronica may have an otherwise unblemished record, this was not sufficient to outweigh the findings that he no longer met the fit and proper person requirement for being a trustee of a superannuation fund.

“In all the circumstances, the tribunal is not prepared to exercise the discretion to set aside the disqualification decision.”