CASE 73/96

Members:
SA Forgie DP
KL Beddoe SM
JD Horrigan M

Tribunal:
Administrative Appeals Tribunal

Decision date: 16 December 1996

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SA Forgie (Deputy President), KL Beddoe (Senior Member) and JD Horrigan (Member)

This matter has been remitted from the Federal Court for consideration regarding the application of sub-section 13(1) of the Occupational Superannuation Standards Act 1987 (``the Act'') to the... Superannuation Fund (``the Fund'') in relation to the year of income ending 30 June, 1991.

2. At the hearing, the Fund was represented by its trustee who is also a director, shareholder and accountant of... Pty Ltd (``the Company''). The Insurance and Superannuation Commissioner (``the Commissioner'') was represented by Miss Wilson, an Advocate in the Insurance and Superannuation Commission (``ISC''). With the consent of the parties, the material admitted in evidence at the first hearing was in evidence at the re-hearing together with further material. That further material comprised a written submission by the Trustee, a pamphlet issued by the Australian Government, Annual Return forms for years from 1986/87, 1987/88, 1989 and 1989/90 together with instructions for their completion, Information Circular No. 18 issued by the ISC, statements issued by the Treasurer on 11 June, 1986 and 21 October, 1992 and the Minister's Second Reading Speech on 18 September, 1987. The Trustee's oral evidence at the first hearing together with his additional evidence was also taken into account at the re-hearing.

THE ISSUE

Background

3. We set out the findings of fact we made in our earlier reasons together with a summary of the legislative framework that is applicable in considering the issues raised by the Fund's application (unreported, 24 October, 1994, Decision No. 9793). As, with only one exception, neither party took issue with those findings and our summary of the legislative framework was not called into question, we will not repeat those paragraphs.

4. The finding with which the Trustee did not agree was set out in paragraph 18 when we said:

``Again on the basis of the Trustee's evidence, which was not challenged in this regard, we find for the purposes of this hearing that the Fund has not transgressed the in-house assets standards set by sub- regulation 16A(17) before 20 July, 1990 or after 26 June, 1991. We also find that the Trustee acted honestly in his dealings with the Fund and believed that all was in order if interest was paid to the Fund during the year and if the standards were complied with at the end of the year.''

5. He said at the resumed hearing that our finding was correct in so far as the Fund had not transgressed the in-house assets standards set by sub-regulation 16A(17) of the Occupational Superannuation Standards Regulations (``the Regulations'') before 20 July, 1990 or between 26 June, 1991 and 30 June, 1991. The transgression had been unknowingly corrected by 30 June, 1991 but there had been a further transgression after that date. That transgression had been corrected as soon as the Fund's auditors drew it to the Trustee's attention in November, 1991. We accept the Trustee's evidence and vary our previous finding of fact accordingly.

Consideration

Burden of proof

6. The first issue we must consider is whether the burden of proof lies upon the Trustee. We agree with Miss Wilson that it does for it is clear from the wording of paragraph 13(1)(b) of the Act that it is for

``the trustees of the fund [to] satisfy the Commissioner that, because of special circumstances that existed in relation to the fund during the year of income, it would be reasonable for the fund to be treated as if it had satisfied the superannuation fund conditions;...''

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7. It is clear from the paragraph that the Trustee must establish two aspects. The first is that there are special circumstances and the second that, because of those special circumstances, it would be reasonable for the Fund to be treated as if it had satisfied the superannuation fund conditions.

What are special circumstances such that it would be reasonable to treat a fund as if it had complied with superannuation fund conditions?

8. The words ``special circumstances'' have been considered in many cases concerned with a variety of discretions. The flexibility which should be ascribed to the words has been emphasised from the earliest cases. In
Beadle and Director-General of Social Security (1985) 60 ALR 225, for example, the Full Court of the Federal Court said:

``The legislature has indicated that six months latitude is sufficient in the normal case. The Director-General has power to fix a longer period in special circumstances. Presumably in this context special circumstances must include events which would render the six months unfair or inappropriate. For example, where the delay beyond six months was due to the claimant's being misled by a departmental officer or was due to the negligence of a third party it might be thought the normal six months would be inappropriate; that special circumstances had been shown which warranted a longer period. More difficult would be questions of ignorance, illiteracy, isolation, illness and the like. It would depend upon the circumstances of the particular case whether these constituted special circumstances. We do not think it is possible to lay down precise limits or precise rules. The matter is one for the Director-General bearing in mind the purpose for which the power is given. The phrase `special circumstances', although lacking precision, is sufficiently understood in our view not to require judicial gloss.''

(page 228)

9. Burchett J considered the meaning of the words in the context of a consideration of whether a medical practitioner should be disqualified from participation in the Medicare Scheme. He did so in the later case of
Minister for Community Services and Health & Anor v Chee Koong Thoo (1988) 78 ALR 307 when he said:

``Bearing in mind the care shown by the draftsman of cl 8 to avoid laying down any binding rules, it is particularly important that the broad discretions, created to give a lively flexibility to the administration of the scheme, should not by the gradual deposition of judicial decisions become fossilised into rigidity. Those discretions are intended to be applied to a great variety of situations. In such a context, the core of the idea of `special circumstances' is that there is something unusual or different to take the matter out of the ordinary course, according to which the presumptions set out in the cause would be expected to apply. As a result, the ordinary course appears less appropriate or fair: cf
Crabtree v Hinchcliffe (Inspector of Taxes) [1972] AC 707 at 731 per Lord Reid;
Jess v Scott (1986) 12 FCR 187 at 195; 70 ALR 185;
R v Secretary of State for Adoption of Children Ordinance 1965 (1984) 2 FCR 533;
Cortez Investments Ltd v Olphert & Collins [1984] 2 NZLR 434 at 437, 439, 441.''

(page 324)

10. These cases were accepted by Beazley J in
Tefonu Pty Ltd v ISC 93 ATC 4727; (1993) 18 AAR 236 as providing an appropriate foundation for a consideration of ``special circumstances'' in the context of the Act.

11. It is apparent from these cases that we must consider what is meant by ``special circumstances'' in the context of the legislation and the purpose it is trying to achieve. In this case it is not only special circumstances which must be considered but special circumstances such that it is reasonable for the fund to be treated as having complied with the superannuation fund conditions. We consider that the variation in wording does not alter our task.

12. What is that purpose and what is the purpose of the standards set by the Act? In considering that question, we have looked to the ISC's ``Guidelines for the exercise of the `special circumstances' discretion in sections 13(1), 15(1) and 15C(1) of the Occupational Superannuation Standards Act 1987'' (``the Guidelines''). In doing so, we bear in mind the principles enunciated by the Full Court of the Federal Court in
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 that:

``In a matter such as the present where it was permissible for the decision-maker to

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take relevant government policy into account in making his decision, but where the Tribunal is not under a statutory duty to regard itself as being bound by that policy, the Tribunal is entitled to treat such government policy as a relevant factor in the determination of an application for review of that decision. It would be contrary to common sense to preclude the Tribunal, in its review of a decision, from paying any regard to what was a relevant and proper factor in the making of the decision itself. If the original decision-maker has properly paid regard to some general government policy in reaching his decision, the existence of that policy will plainly be a relevant factor for the Tribunal to take into account in reviewing the decision. On the other hand, the Tribunal is not, in the absence of specific statutory provision, entitled to abdicate its function of determining whether the decision made was, on the material before the Tribunal, the correct or preferable one in favour of a function of merely determining whether the decision made conformed with whatever the relevant general government policy might be.''

(pages 69-70)

13. It is seen from those Guidelines that the Act's purpose is seen to be ancillary or complementary to the purpose of the Income Tax Assessment Act 1936 (``ITA Act''). They see the interlocking framework of the ITA Act and the Act and the Regulations in the following way:

``(b) To determine what is the purpose of the OSS Act/Regulations one must first consider that one of the purposes of the Income Tax Assessment Act 1936 (`ITAA') is to encourage persons to contribute towards superannuation funds for their retirement so that retired persons will have a higher standard of living. The ITAA achieves this objective by providing tax concessions in relation to superannuation funds.

The purpose of the OSS Act/Regulations is ancillary to, or complementary to this purpose for the ITAA.

• • The primary purpose of the OSS Act is to establish the minimum standards with which funds must comply in order to obtain these tax concessions;
• • Another purpose of the OSS Act is to establish a system (self-assessment and monitoring/supervision by the ISC and issuing of notices regarding compliance with standards) aimed at ensuring that if the government is to provide tax concessions in any given year those tax concessions are going to funds which are in fact complying with those standards;
• • The purpose of establishing minimum standards is to enhance the role of superannuation in the provision of genuine retirement income.''

(T documents, page 82)

14. The Guidelines continue by setting out some of the factors which are considered to be relevant in assessing whether there are special circumstances.

15. The factors set out in the Guidelines relating to special circumstances are:

• ``(i) the particular standard breached;
• (ii) the degree of breach of the standards;
• (iii) the effect of the breach on the long-term retirement interests of the members (although this factor alone is not `special' as the term has been interpreted in the Administrative Appeals Tribunal);
• (iv) whether the trustee knew of the breach and took steps to rectify the breach during the relevant year of income;
• (v) claims made that the breach will be rectified during the relevant year of income;
• (vi) claims made that incorrect advice from the ISC was relied on, providing that the fact of reliance on that advice was reasonable in all the circumstances;
• (vii) whether the trustees took any action to remedy breaches during the relevant year of income after they became aware of incorrect advice having been provided by the ISC;
• (viii) special practical difficulties faced by the trustee in seeking to comply;
• (ix) impossibility of complying with the standards;
• (x) ignorance or misunderstanding of the nature or effect of the standards, providing that the ignorance or misunderstanding was reasonable in all the circumstances.''

(T documents, pages 82-83)

16. This list is followed by a caveat to the effect that the list of factors is not a closed list

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and that the delegate of the Commissioner should

``... weigh all factors together before deciding whether the circumstances are sufficiently `special' to warrant departure from the ordinary course and purposes of the... Act''

(T documents, page 83)

17. The Guidelines also explain how the Commissioner regards the manner in which the competing interests are to be weighed against each other in determining whether there are special circumstances. Paragraph 6 of the Guidelines states:

``The exercise of the discretion involves a consideration of competing interests viz the interests of the Government in ensuring that tax concessions are granted to funds to achieve only the Government's intended purposes against the interests of the fund in obtaining a notice of compliance and, therefore, tax concessions, in spite of a breach or breaches being committed. Officers must weight up the extent to which the breach would adversely affect the Government's interests and whether circumstances surrounding the breach or surrounding breaches are so `special' that those adverse effects should not preclude a non-complying fund being deemed as a complying fund which will become eligible for tax concessions.''

(T documents, page 83)

18. There then follows a consideration of the meaning of ``special circumstances'' and a list of questions which

``... may assist delegates in determining whether particular sets of circumstances advanced by trustees are sufficiently `special', in the context of the OSS Act, to justify departure from the ordinary course. The list of questions is not closed but questions (a), (b), (d) and (e), in particular, should be answered in the affirmative if the discretion is to be exercised favourably.

• (a) are there factors existing which would justify the making of an exception to the general rule that if there is a breach of standards, a notice of non-compliance is to issue;
• (b) are the circumstances advanced unusual or different in character, quality or degree;
• (c) do the circumstances relating to the breach make it unjust, unreasonable or inappropriate to issue a notice of non- compliance;
• (d) if there has been a gross departure from a standard or standards, are there very weighty `special' circumstances advanced;
• (e) have all the facts and circumstances been examined together and not in isolation. (This is important because what could constitute special circumstances in relation to one fund may not constitute special circumstances in relation to another, when taking into account all the circumstances of that other fund. It is important to keep an overview of all the facts of a matter);
• (f) is there an element of involuntariness in the breach or were external forces beyond the control of the fund present to cause the breach;
• (g) do the circumstances advanced as `special' amount to much more than mere bad luck.''

(T documents, page 84)

19. The Guidelines with which we have been provided do not show the date on which they were issued. Although we do not draw any conclusion from it, we note that our version of the Guidelines differs from that reproduced in Case Z27,
92 ATC 255 at pages 259-260.

20. Guidelines of the type issued by the ISC are important and provide guidance in ensuring that laws are administered uniformly. The tribunal pays great regard to them as is apparent from statements made by the Full Court of the Federal Court in cases such as Drake's Case and by the Tribunal in
Becker and Minister for Immigration and Ethnic Affairs (1977) 1 ALD 158. They do not, however, relieve us of the responsibility of ascertaining for ourselves the purpose of legislation and the factors which are relevant in a consideration of its application. In many cases, guidelines are consistent with the tribunal's conclusions on those matters. This case is a little different for we do not see the object of the Act in quite the same way. We will explain why that is so after briefly touching upon the history of the relevant provisions in the ITA Act and the Act.

21. For many years, superannuation funds have been required to meet certain criteria or standards before they may claim taxation

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concessions or the full range of concessions available under the ITA Act. At times, the criteria have been directed not so much at ensuring that individuals receive appropriate benefits from the funds but at wider criteria. So, for example, the criteria introduced by the Income Tax and Social Services Contribution Assessment Act 1961 were directed towards ensuring that superannuation funds maintained a certain level of investment in Commonwealth and public authority securities. That level of investment was intended to assist in the financing of Commonwealth and State public works from levels other than taxation. This is apparent from the Second Reading Speech of the then Treasurer (House of Representatives Hansard, 26 April, 1961, pages 1,151-1,155).

22. By 1964, the Ligertwood Committee had reported and drawn attention to three types of superannuation funds. These were identified by the then Treasurer in his Second Reading Speech on introducing the Income Tax and Social Services Contribution Assessment Bill 1964 as:

``... the traditional class of superannuation fund to which the employer contributes for the benefit of his employees. There is an intermediate class that often caters for the general public, whether employees or otherwise, and which, while serving a useful role in providing retirement benefits for people not able to participate in the traditional type of fund, is, nevertheless, to some extent, used to accumulate tax-free savings for contributors. And there is a third class which, though in the guise of superannuation funds, can only be viewed as means of accumulating tax-free savings....''

(Hansard, House of Representatives, 22 October, 1964, page 2,217)

23. The Income Tax and Social Services Contribution Assessment (No.3) Act 1964 which later came into force, continued to provide taxation exemption to the first class of superannuation funds provided they complied with the rules as to the investment in public securities (see paragraph 21 above). The legislation then established certain tests in relation to the other superannuation funds. The object of the tests would seem to have been to tax those funds which were deriving income from investments from private companies and, to a certain extent, where the income was derived from persons not at arm's length with the fund.

24. There were various amendments to the scheme over the years but of particular interest in the context of this case is the Taxation Laws Amendment Act (No.2) 1985. That legislation introduced statutory loan-back rules which were the predecessor of the standard now found in paragraph 16A(17)(b) of the Regulations. In introducing those rules, the then Minister of Health, on behalf of the then Minister for Immigration and Ethnic Affairs and Minister Assisting, the Treasurer said that this

``... will give effect to the Government's decision announced on 11 March, 1985, to introduce statutory rules to apply to certain investments by employer sponsored superannuation funds. That decision reflects the Government's concern that excessive investment by a superannuation fund in the sponsoring employer's business may mean in the event of the failure of that business, that employees lose not only their jobs but also their superannuation entitlements....''

(Hansard, House of Representatives, 19 September, 1985, page 1363)

25. A major change in the formulation of the standards occurred with their removal from the ITA Act to the Act. The Commissioner then decided whether the superannuation funds complied with the standards. If they did not comply, the Commissioner of Taxation retained

``... responsibility for the assessment of tax on income of non-complying funds, certain private company dividends and excessive non-arm's length income derived by funds and where any excessive or unauthorised benefits are paid from funds.''

(Hansard, House of Representatives, 29 October, 1987, page 1722)

26. The purpose of the standards themselves is dealt with separately in the Second Reading Speech of the then Minister for Employment Services and Youth Affairs and Minister Assisting the Treasurer when he said:

``In brief, these standards, which are to be prescribed in regulations under the Bill, provide for improved vesting of benefits arising from both employee and employer contributions, improved preservation requirements and measures to ensure greater member involvement in the control of superannuation funds and improved security

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of members' benefits. Funds will also need to comply with the existing requirements of the Income Tax Assessment Act.... Implementation of the new standards... represents an important step in ensuring that taxation concessions made available to superannuation funds are directed towards the provision of genuine retirement benefits. To that end, the Occupational Superannuation Standards Bill is an important element in the Government's overall retirement incomes policy.''

(Exhibit 5, Hansard, House of Representatives, 18 September, 1987, pages 333-334)

27. It is clear from our outline of the history of the legislation and of the intentions stated in the Second Reading Speeches that the standards themselves have a purpose separate from the purpose of the scheme of taxation concessions given to superannuation funds. The purpose of the standards is, as the Minister said, to lead to ``improved preservation requirements and measures to ensure greater member involvement in the control of superannuation funds and improved security of members' benefits'' (see previous paragraph). It follows that a consideration of whether or not there are special circumstances must be considered against that purpose.

28. Clearly, compliance with the standards has taxation consequences in the sense that compliance determines whether or not taxation concessions are available to the fund. The purpose of the taxation concessions, however, is something different from those of the standards. There is no doubt that the purpose of the taxation concessions is to encourage people to contribute to superannuation funds so that they can look forward to a higher standard of living. It is equally clear that regulating the availability of those concessions is, in the words of the Minister, to ensure ``... that taxation concessions made available to superannuation funds are directed towards the provision of genuine retirement benefits.'' (see paragraph 26 above)

29. While the availability of the taxation concessions is dependent upon a fund's compliance with the standards, that in itself is not enough to say, as the Guidelines do, that the purpose of the standards is to establish the minimum standards with which the fund must comply in order to obtain those concessions (see paragraph 13 above). To say that is to ignore that they have their own purpose quite apart from their place in the scheme of taxation concessions available under the ITA Act.

30. We cannot agree with the Guidelines' statement that the exercise of the discretion under sub-section 13(1) of the Act involves balancing the Government's interest that taxation concessions are granted only to funds that comply with the standards against a fund's interest in obtaining a notice of compliance. To say that is to look only to the interest of the fund in seeking a notice of compliance. It is to give no weight at all to the purpose of the standards to improve preservation requirements, member involvement and the improved security of members' benefits.

31. We have concluded that a consideration of whether or not there are special circumstances within the meaning of sub- section 13(1) of the Act must be made by weighing the circumstances put forward against the purpose for which the standard was enacted. Although we recognise that there are taxation implications involved in a decision as to whether or not a fund has complied with those standards, we do not consider that they are implications which we should take into account.

32. Should we be incorrect in our conclusion and should we be required to take into account the taxation implications, we have concluded that the competing interests which need to be taken into account are these: on the one hand the interest in ensuring that funds are conducted to preserve members' benefits, to give members greater control and to give greater security of benefits and on the other hand the interest in ensuring that only funds providing genuine retirement benefits receive the benefit of the taxation concessions. It may be said that the two interests cannot properly be balanced for the ``penalty'' of removing the taxation concessions is, for all practical purposes, visited not upon the trustees who do not comply with the standards but upon the beneficiaries and funds those standards were meant to protect. Despite that difficulty, it is the balance that Parliament would require us to make if the taxation concessions are to be taken into account.

Are there special circumstances such that it is reasonable to treat the Fund as having satisfied the superannuation fund conditions?

33. At both the hearing and the re-hearing, the Trustee submitted that there were several

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matters which should be taken into account. We will not repeat those already set out in our earlier reasons.

34. The Trustee stated that he had never denied that the in-house assets standards had been transgressed but emphasised that there had never been any intention to gain a benefit or that it had occurred for anything other than the best of motives. Early retirement of the director and the consequent payment of funds to him had contributed to the breach although the Trustee acknowledged that the in-house assets would still have exceeded the cost of all of the assets of the Fund by a figure of between 1% and 5%. The extent of the transgression would have been on a much smaller scale.

35. The Trustee said that he had not been aware that further loans to the employer sponsor would prejudice any concession applicable to the Fund. The loans which had been made had not been made as a result of his wilful default or neglect.

36. The transgression was no threat to the benefits of the Fund's members. The additional taxation and interest which will have to be paid if the Trustee's application is not successful will certainly be a significant penalty for the Fund as it will have to pay a further sum in the order of $29,000. The penalty, the Trustee submitted, amounts to approximately 360% of the taxation payable if the Fund were found to have complied with the standards. Had he, as an individual taxpayer, attempted to evade taxation, he would have only had to pay the original taxation plus 75%. The Trustee said that he was unable to reconcile what he did in good faith with the penalty that his actions had attracted.

37. It was not fair that the Fund should be penalised for what he did. In an effort to minimise the costs to the Fund, he had made all the appearances. It was important that he gave his time and incurred any costs rather than the Fund's doing so.

38. The Trustee felt that he had not been assisted by the Insurance and Superannuation Commission (``the ISC'') to be a trustee or to protect the Fund's members despite the statement in the ISC's brochure that

``There is a Government watchdog which enforces these rules. It's called the Insurance and Superannuation Commission (ISC for short). They help trustees to understand and follow these rules. If trustees do not follow the rules the ISC acts to protect members.''

(Exhibit DEETYA)

39. In her comprehensive submissions, Miss Wilson has addressed each aspect of the circumstances put forward by the Trustee and, with careful reference to previous authorities, has argued that none is sufficient to establish that special circumstances exist in this case. We will not set her submissions out in detail but note that she addressed each head raised in the Guidelines and by the Trustee and referred to the appropriate cases in rebutting each.

40. We agree with Miss Wilson that, when looked at individually, each of the grounds put forward in this case does not justify a finding that there are special circumstances in this case. So, for example, when taken in isolation from the other facts in this case, we agree with her submission that the Trustee's ignorance of the law that had been in force for some five years at the date of the breach is no excuse (see, for example, Case Z27, (1992) 92 ATC 255, Case 47/94,
(1994) 94 ATC 417 and Case Y10,
(1991) 91 ATC 177) and nor is the fact that the loans have been made at a commercial rate of interest and that there was not only no detriment to the Fund's members but a benefit to them and the Fund (Case 17/94,
(1994) 94 ATC 198, Case 33/94,
(1994) 94 ATC 306 and Case 47/94,
(1994) 94 ATC 417).

41. Miss Wilson has also submitted that, when an overall view is taken of the circumstances, there are no special circumstances. We have also considered the circumstances in that light. The Trustee has, at all times, acted with care and diligence. We are satisfied that he understood that he had obligations in relation to the operation of the Fund even though he misunderstood certain aspects of his obligations in respect of the in- house asset standards. Despite his misunderstanding, we find that the Trustee was not careless of his obligations. Although called the Accountant of the Company, the Trustee is in essence its book keeper. While an important position in the day to day management of the activities of the Company, it is not a position likely to bring a person into contact with publications detailing the standards. The material he obtained from the ISC was not sufficient to do so. Ignorance of the law is not in itself relevant but, unlike the trustee in
QX95B and QX95C and Insurance and

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Superannuation Commissioner (unreported, 1 March, 1996, Decision No. 10,781), the Trustee was not careless of his obligations. He had the assistance of accountants and he made his best endeavours to comply with the standards.

42. Also of relevance in the extent of the breaches is the extent by which the in-house assets exceeded the permissible level of 10% of the Fund's assets. The purpose of the in-house asset is that given when it was first introduced in the ITA Act (see paragraph 24 above). It is to ensure that excessive investment by a fund in the sponsoring employer's business does not, in the event of the failure of that business, mean that employees lose both their jobs and also their superannuation entitlements. In this case, the major factor leading to the breach arose from the early termination payment paid to the retiring director. This payment was unexpected and, we find, not one that could have been foreseen by the Trustee. It was the payment that led to the Fund's first exceeding the in-house assets level on 20 July, 1990. Taking into account the fact that the percentage of in-house assets was then 14.14% with the level of those assets being $33,620 and the Fund's remaining assets amounting to $237,796, the security of the beneficiaries could not be said to be jeopardised. This is particularly so when it is remembered that the percentage of in-house assets to the Fund's assets excluding the early termination payment amounts to 8.67%.

43. We find that the subsequent loans to the Company in August, 1990 increased the percentage by which the in-house assets exceeded 10%. They amounted to $25,000 in all and took the maximum amount owed to the Company to $58,620. Looked at in overall terms, this meant that the level of the percentage increased from 14.14% to 15.06%. Looking at the percentages disregarding the early termination payment, they ranged from 8.67% to a maximum of 15.06% in August, 1990. The percentages decreased until both were under 10% in June, 1991. This accorded with what we find to be the Trustee's understanding that those percentages had to be below 10% at the end of the financial year.

44. Despite their being in excess of the requisite 10%, we find that at no time were the interests of the beneficiaries at risk for the Company always had sufficient assets to repay the amount borrowed. The assets of the Fund were not being used without regard to, or careless of, the interests of the beneficiaries of the Fund. Those interests were very much in the Trustee's mind and, in the circumstances of this case, those interests were protected.

45. Taking all of the circumstances in this case into account and particularly the care which the Trustee has taken in attempting to act in the interests of the Fund, the assistance he has sought even though he was mistaken in his understanding of the standards' requirements, the protection which was afforded to the Fund's beneficiaries despite the breaches, the unexpected payment of the early retirement payment and the relatively small increase of the percentages if the early retirement payment is ignored all lead us to conclude that there are special circumstances such that it is reasonable to treat the Fund as if it had satisfied the superannuation conditions within the meaning of sub-section 13(1)(b) .

46. We should add that, even if we are incorrect in disregarding the taxation implications in assessing whether there are special circumstances and are required to take them into account, we reach the same conclusion. The circumstances relating to the Fund and its failure to meet the standards would need to be weighed against the object of the ITA Act to provide concessions where superannuation funds are directed towards the provision of genuine retirement benefits. In this case, we are satisfied that the Fund has, at all times, been directed towards the provision of genuine retirement benefits for its members. It is not being used as a means of providing ready loan capital for the Company and was, at all times, administered with the interests of the beneficiaries in mind. Given the combination of circumstances we have found and balancing those against the interests evident from the ITA Act, we find that there are special circumstances such that it is reasonable for the Fund to be treated as if it had satisfied the superannuation fund conditions within the meaning of sub-section 13(1)(b) of the Act.

47. For the reasons we have given, we:

• 1. set aside the decision under review;
• 2. substitute a decision that the Fund satisfied the superannuation fund conditions in relation to the year of income ending 30 June, 1991; and
• 3. remit the matter to the Commissioner with a direction that he issue a notice to the

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  Trustee stating that the Fund satisfied the superannuation fund conditions in relation to the year of income ending 30 June, 1991.