Appeal denied for lodgement failures

An SMSF trustee has failed to prove he was not liable for failing to submit an annual return for his fund for three consecutive years, with the court dismissing an argument it was the fault of his accountant who failed to lodge the returns.

In the case of Schmidt v The King [2026] SASC 101, heard in the South Australian Supreme Court on 25 May, the trustee appealed a conviction of failing to comply with administrative obligation, under section 8C(1)(a) of the Taxation Administration Act 1953, and a fine of $3891 as a result of not lodging SMSF annual returns (SAR) for the 2021, 2022 and 2023 financial years.

While the fund had been managed by the trustee since 2007, he had engaged the services of a registered accountant to lodge his personal, business and SMSF tax returns for the past 10 years, and in bringing the appeal argued he was unable to complete the returns himself.

Additionally, the trustee argued while the failure to file an SAR was an offence of absolute liability, he should be discharged without conviction or penalty as his accountant, who was the only person capable of filing the returns, had accepted full responsibility for the failure to do so.

He also claimed the commonwealth was not deprived of any revenue through the failure to file the returns and there was no financial or other benefit to him from failing to file them.

Court records of the case stated the counsel from the Director of Public Prosecutions highlighted that while the prosecutor and magistrate in the initial case, heard in the Magistrates Court of South Australia, recognised the trustee could not have filed the returns, the magistrate said it did not absolve him of the responsibility as the offence was one of absolute liability.

In dismissing the appeal, Justice Katrina Bochner agreed with that assessment while rejecting the trustee’s argument the magistrate overlooked the issue of capability to lodge in his decision.

“When the magistrate’s remarks are read as a whole, it becomes, in my view, abundantly clear that he took all relevant matters into consideration,” Bochner said.

“He set out in broad terms the nature of the offences, noted that affidavits had been filed on behalf of the applicant which explained the circumstances of the offending and said that he has had regard to the contents of those affidavits.”

She also pointed to sentencing comments from the magistrate that stated: “At the end of the day, Mr Schmidt’s tax responsibilities are his. And that the offences occurred over a long enough period of time for him to have made some additional inquiries of his accountant and perhaps engaged an alternative accountant.”

Adding to this, she said: “I further reject the appellant’s criticism of the magistrate’s remarks that the appellant could have instructed another accountant. It is clear that these offences occurred over a number of years and that the appellant began inquiring of his accountant about the failure to file the returns in 2021. Given the length of time that the appellant was on notice that there was a problem with his returns, the remark made by the magistrate does not appear unrealistic or informed by hindsight.”