The court heard that Kalangalupe Pavihi had contravened section 68B(1) of the SIS Act through assisting 68 individuals in the establishment or intended establishment of 35 SMSFs. According to court documents, over $800,000 was released from the SMSFs through the scheme.
Ms Pavihi was not a registered tax agent or financial adviser and worked as a credit card customer service operator at Westpac at the time she operated the scheme.
Court documents detailed that she “obtained personal details of the intended trustees and used those details to complete an online application form on the website of an organisation, Esuperfund Pty Ltd, which… provided services in relation to SMSFs, including the provision and lodgement of documentation required to set up an SMSF”.
The documents were provided to the trustees to sign and lodged with Esuperfund to complete the establishment of the SMSFs, the court heard.
According to an ATO statement, the trustees reportedly used the money released through the SMSFs to fund a number of personal expenses including home renovations and stamp duty.
In most instances, Ms Pavihi charged a fee for her services and in some cases also received loans from the trustees, gaining approximately $27,900 from the scheme overall.
The Commissioner of Taxation acknowledged the cooperation of Ms Pavihi in the case in having admitted to contraventions of the SIS Act and expressed remorse for her actions. The judge also acknowledged that Ms Pavihi was a single mother who was “very likely” to “never have the capacity to pay the penalties that are to be imposed”.
As such, when ordering the $220,000 penalty, the court took an undertaking from the commissioner that if Ms Pavihi was not able to pay the fine back within six years, the commissioner would need to seek leave from the court to reassess any changes to her financial situation “such as a financial windfall, the discovery of any concealed assets or an increase in earning capacity”, before taking further enforcement action.
Commenting on the case, ATO assistant commissioner Dana Fleming said illegal super release schemes caused considerable financial disadvantage to the people who could least afford it.
“It’s not just the money they won’t have at retirement. People who access their super illegally may also need to pay tax on the funds they illegally accessed, along with penalties and interest,” Ms Fleming said.
“If you come across a tax or super scheme and you’re not sure it’s okay, get a second opinion.”
Only think I can think of was that as a single parent, maybe the judge was taking the plight of her kids into account, depending on their age and her support network. Absolutely agree though that there still needs to be some sort of effective punishment that will act as a deterrent for her and others.
Also, goes to show that all the training & education requirements, licensing etc isn’t going to stop the dodgies from running their scams.
[i]”Ms Pavihi was not a registered tax agent or financial adviser and worked as a credit card customer service operator at Westpac at the time she operated the scheme.”
[/i]So……she has been banned from doing something she was not licensed to do in the first place. It’s like banning a car thief from stealing cars for 7 years……..
7 year ban? How is this blatant and willing breach not a lifetime ban from setting up SMSFs (not that she was even licensed to do so in the first place) along with jail time?
Essentially just a slap on the wrist outside of the fine that she wont be able to pay.
Well, boo hoo, let us all hold hands and sing her praises. Better still, let’s start a crowd funding campaign to raise the $220k, pay the fine and lodge an appeal against the 7 year sentence. Or, let’s really make a meaningful penalty which will make anyone else think about doing this in the future. When will we learn to get serious about these sorts of crimes? This is a clear case of fraud and again puts SMSFs in the spotlight.