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Superannuation ripped-off beyond reasonable doubt
Lawyers Peter Bobbin and Christina Wolfsbauer argue that if someone defrauds you of your super you may still be ripped off even after you find the perpetrator and have it restored.
Has your superannuation pension been ripped-off, defrauded, dishonestly attended to or stolen from?
From 1 July 2017 as long as your perpetrator is convicted you can apply to have your super transfer balance cap restored; to the extent of the proven fraud. This assurance is beyond reasonable doubt, provided you act quickly.
In an extraordinary piece of double speak reminiscent of George Orwell’s 1984, if the perpetrator of your super fraud has their super taken from them because they put your super into their super fund so as to defeat their
creditors, which of course includes you, their ability to regain their tax free super pension is restored, on a balance of
probabilities standard.
If all of this sounds extraordinary and incredible, it is. The standards are wrong. From 1 July 2017 the new super pension regime allows a person to have up to and no more than $1.6 million in a tax free super pension. There are some lucky Australians who have this and much more. There are very many more who worked hard and sacrificed much to enable their $1.6 million super to fund their 25 or 30 year plus retirement. In just a few months’ time, from 1 July 2017, when a husband, wife or partner has died and dedicated their super to yours, you may join the many other Australians who on 1 July 2017, will have used up their $1.6 million super pension transfer balance cap.
Sadly some of you will, in the mere months and years to come, have your super ripped off, defrauded, dishonestly attended to or stolen from. Those who are lucky and discover the fraud before 1 July 2017 will find that their $1.6 million transfer balance cap will not be affected. However, where the fraud is later discovered, the pension cap opportunity will be lost unless the perpetrator is convicted. This is where beyond reasonable doubt comes in.
Your restoration of your super tax-free pension cap depends on your perpetrator being convicted to a criminal standard of proof that is beyond reasonable doubt. As long as your perpetrator is convicted, your pension cap entitlement can be restored, perhaps up to $1.6 million.
If this doesn’t sound quite right let me quote the Australian Taxation Office. But before I do, please remember don’t shoot the piano player who is playing the tune of the new $1.6 million pension cap rules.
Where the super interest that supports an individual’s super income stream is reduced because of a loss suffered by the super income stream provider as a result of fraud or
dishonesty, and the offender is convicted, the individual is able to notify us and receive a debit in their transfer balance account to the value of the reduction.
The offender must be convicted! Any police officer in the country will tell you that white collar embezzlement fraud is the hardest criminal to convict.
The simple truth is that not only will the super pensioner have been defrauded and their money gone, the probability of a lack of conviction of the perpetrator will be matched by an inability to restore personal super pension rights.
Shame on you to have been ripped-off!There is a magnificent irony in this, the former super pensioner may be forced to sell their home if the perpetrator does not get temporary free accommodation in a Government facility!
Let’s be clear about this. To gain the benefit of free accommodation in a small room with weekend visitation rights, the perpetrator of the fraud must be convicted beyond reasonable doubt. A jury of our peers must be convinced beyond any element of reasonable doubt that he or she perpetuated the criminal fraud on your super.
If the perpetrator goes to jail, the super pensioner gets a debit against their transfer balance cap that might enable them to reinstate the value of their former super pension.
Now let’s look at the other side. What if the perpetrator took your super and put it into their super?
The Australian Taxation Office goes on to say that: Where the super interest that supports an individual’s super income stream is reduced because of payments required to comply with the Bankruptcy Act 1966, the individual is able to notify us and receive a debit in their transfer balance account to the value of the reductio...Generally, this is only where out-of-character contributions were made to super with the intent to defeat creditors...A person who acted with intent to defeat their creditors and who has been caught out is able to get their super transfer balance cap reinstated.
Let’s also put this into context: The perpetrator steals your super. They put your super into their super. They get caught. If they are convicted of stealing your super you get back your rights to a tax free super pension. If they are not convicted, you do not. Your super future life is subject to their beyond-reasonable-doubt defence.
But if the perpetrator’s bankruptcy trustee is unable to prove that they had out-of-character contributions… made to super with the intent to defeat
creditors the bankrupt perpetrator gets to keep their super.
If the perpetrator fails to prove this and the bankruptcy trustee claws this back, though not necessarily back for you, the perpetrator regains their super entitlement!
The standards of legal proof differ. The perpetrator needs to be convicted beyond reasonable doubt before you get your tax free super entitlements back. Their super and their transfer balance cap is protected as long as they can claim on a balance of probabilities that their super contributions were not out-of-character or made with the intent to defeat creditors.
In summary:
- Your super is gone; the perpetrator’s super might be protected.
- Your super is gone; if the perpetrator is convicted, your pension cap is restored but their super might still be protected.
- Your super is gone; if the perpetrator escapes conviction, your pension cap is lost but their super might still be protected.
- Your super is gone; if they are convicted and bankrupted by the theft of your super, both your and the perpetrators tax free super pension transfer balance caps can be restored.
- And therein lies the farcical irony.
Peter Bobbin and Christina Wofsbauer are the principal partner senior associate of Argyle Lawyers.
AUTHOR
Industry Expert
Leading industry experts contribute to the Money Management & Super Review website and magazine, providing insight into a wide range of specialised topics within the financial services industry.
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What about when "the super interest that supports an individual’s super income stream is reduced" because of incompetence by the fund manager such as Nil increase in principal over the years, aka poor performance. Especially when compared to many of the industry super funds ??