The accuracy of the content is not guaranteed. Please rely only on the authorised document. The Federal Court on Friday ruled that Adelaide accountant Anthony Philip Holloway and his firm had carried out a scheme to avoid the in-house asset provisions of the Superannuation Industry (Supervision) Act (the SIS Act). Justice Mansfield has adjourned the matter until 15 June 2000 when he will consider orders and penalties to be imposed on Holloway. The action, the first of its type taken under the legislation, was a test case by the Australian Prudential Regulation Authority (APRA) against Holloway and his firm, Holloway & Co, of 55 Pennington Terrace, North Adelaide. APRA spokesperson Roger Brown said today, "Superannuation funds cannot invest more than five per cent of their assets in the employer sponsor of the fund. This is designed to prevent fund members from losing their retirement savings, as well as their jobs, if the employer strikes difficulties. This is important, even in a small fund where the members may also be principals in the business. "The tax concessions for superannuation are designed to promote retirement savings, not be a source of cheap working capital for businesses through avoidance of the in-house asset rules." The court ruled that Holloway had operated a scheme for his clients whereby a business would make a contribution to a superannuation fund, which would "invest" the money into a unit trust. While the unit trust supposedly had an arm's length trustee, in fact, the business principals controlled its operations. The unit trust would then send the money back to the business. The Federal Court ruled that Holloway had carried out the scheme in relation to 17 such "round robin" transactions. "This case shows that superannuation advisers cannot flout the law and expect to get away with it," said Mr Brown. "APRA treats avoidance schemes such as that devised by Mr Holloway for his clients very seriously. At the same time, trustees of superannuation funds should remember that they have sole responsibility in relation to their fund. As such, they cannot hide behind wrong-doing by their adviser. Responsibility for the fund's compliance status under the SIS Act ultimately rests with them." APRA has removed all tax concessions for the relevant years for 18 of the funds for which Mr Holloway acted as adviser.
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