Veteran accountant stripped of SMSF rights as ATO prevails in AAT
The tribunal has upheld the Tax Office’s decision to disqualify a CPA with over 50 years’ experience after he continually breached super laws for his own gain.
An accountant with over 50 years of experience has been banned from being an SMSF trustee after a tribunal found his expertise did not extend to complying with superannuation laws.
In a judgment this week, the AAT upheld the ATO's disqualification of Giuseppe Coronica, finding he had committed serious contraventions over multiple years in managing his own SMSF, including using his position to “game the system” to cut his tax bill.
"While the tribunal acknowledges Mr Coronica's passion and enthusiasm for accounting, it was patently clear Mr Coronica did not have the proper discipline and focus with respect to the regulatory regime governing superannuation funds," senior member Gina Lazanas said.
“Mr Coronica adopted an opportunistic attitude to suit his self-interests as he took advantage of his role as a trustee of the fund.”
Coronica is a CPA fellow and registered tax agent who had managed his SMSF since 1975, preparing and lodging annual income tax returns between 2008 to 2014 and acting as its approved auditor for 2000 to 2007. The fund had been in pension phase since 2016.
A 2018 ATO audit found multiple breaches of the Superannuation Industry (Supervision) Act (SISA) between 2009 and 2014, painting a picture of systemic non-compliance and resulting in his disqualification.
While Coronica initially managed to have the disqualification set aside on review in the AAT, the decision was reversed in the ATO’s appal to the Federal Court.
During remittal hearings in the AAT, Coronica argued for the same outcome as the tribunal’s initial decision, claiming his disqualification was an overreaction given his experience and lack of future compliance risk.
However, in February this year the AAT ultimately affirmed the disqualification due to the nature, seriousness and number of contraventions, as well as the risk of future non-compliance and importance of general deterrence.
Upon seeing another SMSF trustee avoid disqualification in a separate case involving surfwear label City Beach founder Gordon Merchant in May, Coronica sought to reopen the proceeding.
He argued his situation was similar to Merchant’s and offered to accept similar undertakings, but the AAT disagreed after a review of its earlier decision.
Lazanas noted his breaches included failing to keep the fund's assets separate from personal assets and acquiring $100,000 worth of overvalued shares.
“The tribunal finds the acquisition of the company shares caused the fund to exceed the prescribed market value ratio of 5 per cent limit of in-house assets,” she said.
“Although Mr Coronica had some valuation experience and was a very experienced accountant and tax agent, the valuation undertaken by him of the company shares was deficient.”
“Mr Coronica was taking advantage of his position to game the system. He was reducing his personal tax liability and at the same time providing a benefit to the fund which would accrue to him in the future.”
Dividends from the shares would have been taxed at Coronica’s higher marginal rate taxed instead at the concessional tax rate of 15 per cent, with the fund also able to access franking credits.
The tribunal found Coronica also breached in-house asset rules by investing in trusts over certain mortgage loans, granting himself a loan for personal purposes on uncommercial terms, and provided misleading documents to the ATO.
“There can be no doubt that there were numerous contraventions of the SISA in the 2009 to 2014 income years which had been established … the nature of the contraventions were significant,” Lazanas said, siding with the ATO and upholding the disqualification.
She distinguished Coronica's case from Merchant's because Coronica's contraventions showed a "wilful disregard for the serious consequences" while Merchant involved a single transaction based on professional advice.
“Mr Coronica was accountable in all situations and clearly failed to act professionally, competently and with due diligence in carrying out his duties as a trustee of the fund.”
“He also exhibited a wilful disregard for the serious consequences to the fund and himself as trustee. Moreover, once the Commissioner audited the fund, he doubled down to defend his questionable positions rather than taking responsibility and properly remedying all breaches."
Latest figures show the ATO disqualified 149 trustees during the December quarter and a record 753 trustees in FY2023, with $29 million imposed in fines.
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