Speaking to SMSF Adviser, DBA Lawyers director Daniel Butler explained the Payne v Commissioner of Taxation case arose because a former de facto spouse of an employer made a complaint to the ATO, following the breakdown of the relationship, claiming they had not received the correct superannuation guarantee payments in years prior.
According to the case notes, the former spouse, Carol Watson, made a complaint to the ATO regarding the compliance of her former spouse, James Payne, with his SG obligations as an employer.
Mr Butler said the ATO then subsequently undertook an audit of Mr Payne’s compliance with his SG obligations.
On June 2011, following the completion of the audit, the Commissioner issued Mr Payne with 15 SGC default assessments for the quarters ended 30 September 2004 to 31 March 2008, according to the notes on the case. There was another amended SGC assessment provided by the commissioner following the provision of further information by Mr Payne.
“The employer was trying to justify that the payment of the wages was up to the employee, [Ms Watson], and probably had the eye off the ball because there was a relationship,” said Mr Butler.
Mr Butler said these types of scenarios were increasingly becoming a common occurrence with awareness around SG payments growing and a lot of SG audits resulting from the breakdown of relationships.
“The ATO often receives some wonderful information after divorces from disgruntled spouses, and here’s one of these cases,” said Mr Butler.
“It’s generally very accurate information provided by the former spouse.”
Often in these cases, as with this particular scenario, Mr Butler said other employees are also brought into it when the ATO conducts the audit.
“It really highlights that when you are having a relationship, the laws still apply,” he said.
“It also highlights that relationships have the propensity of breaking up, and therefore why would you be a fool and expose yourself to bending any of the tax rules when an aggrieved spouse is going to blow the whistle on you?”
Mr Butler said advisers and accountants need to ensure their clients, particularly those running their own businesses, are on top of what is required in relation to SG payments.