The Australian Taxation Office (ATO) is continuing to exercise its ability to garnishee an individual’s superannuation benefits in an effort to recover any outstanding money owing to it.
Rockwell Olivier head of personal legal services Peter Bobbin recently confirmed the ATO was currently taking that course of action and that he had dealt with several of those scenarios.
“Has it ever happened? I’ve had four of them,” Bobbin told the Institute of Public Accountants National Congress in the Hunter Valley.
“There’s also the Federal Court decision in April last year of Denway’s case. Was it related to excess contributions? It had nothing to do with contributions.
“It is [a case of] Peter has a bill to the tax office so the tax office issues a garnishee on the super fund of which Peter is a member, whether it’s an SMSF, public offer or in between.”
He pointed out in those situations the ATO must still abide by the laws governing proper access to retirement savings.
“When can they capture that? The tax office cannot get that which the taxpayer themselves cannot,” he explained.
“So as soon as the taxpayer is entitled to their super, the tax office can get it.”
He advised proper structuring of the individual’s situation could help in those circumstances.
“If your client is effectively structured today, the ability to negotiate with the tax office [in these situations] is stronger,” he explained.
“The weaker the structure is, the weaker the ability to negotiate.
“So [you must] understand, for example, superannuation is an exposed asset that is not protected.
“The only time superannuation is protected is when you’re bankrupt.
“The structuring of a discretionary trust and restructuring of the super [benefits] to limit the possibility of garnishees is an important strategy when dealing with the tax man.”