Tuesday, February 16, 2021

People are strange** … When SMSF trustees disagree

Today’s post considers the situation of where the trustees of a Self Managed Superannuation Fund (SMSF) cannot agree. 

This situation arose perhaps most starkly in the New South Wales Supreme Court decision of Notaras v Notaras [2012] NSWSC 947. 

In this case, two brothers were the trustees and members of an SMSF. Over time, one of the brothers (Brinos) made withdrawals from the SMSF, of which around $60,000 were alleged to be in excess of his entitlement. 

Brinos’ brother (Basil) had no knowledge of the withdrawals and thus had not provided consent. 

Basil approached the court to seek an order that Brinos be removed as trustee of the SMSF due to his failure to act jointly and replaced with a corporate trustee (Bazport) of which Basil was the sole director and shareholder. 

The court accepted Basil’s arguments and appointed Bazport as the co-trustee in the place of Brinos leaving the SMSF with both an individual and corporate trustee. 

The Court confirmed Basil would (as a result of the decision) need approval from the Tax Office for its failure to comply with the superannuation law requirement of all members of an SMSF also being trustees. 

As usual, please contact me if you would like access to any of the content mentioned in this post. 

** for the trainspotters, ‘People are strange’ is a song by The Doors. View hear (sic):