Reference no: EM132117524 , Length: word count:1500

Question 1

The Aussie Bank is a smaller bank that is in the business of lending mortgages to residential home owners. When someone applies to refinance their residential property with Aussie Bank, Aussie Bank will request one of the professional valuers on their list to give a valuation of the property. This involves the valuer contacting the owner of the property and arranging for a time they can visit it so to be able to value it. The facts surrounding this arrangement are:
- These valuers have an ABN, are registered for GST and are described as independent contractors. They have their own business cards but operate from a home office rather than having a separate office.
- The valuers are covered by Aussie Bank's professional liability insurance.
- The valuers are paid by the valuation job on a sliding scale that is proportional to the value of the property.
- 90 per cent of the valuers only undertake work for Aussie Bank and they undertake about 40 hours a week of work for them. The other 10 per cent service several banks.
- The valuers travel to each property using a car provided by Aussie Bank. They also use software and laptops provided for by Aussie Bank.
- Delegation is not allowed under any circumstances.
- When they are not visiting properties the valuers do most of their work from their home offices.
- Aussie Bank commonly arranges for mortgage applicants who dealt with the valuers to give feedback on the politeness and promptness of the valuers.

Discuss: Whether the valuers are employees under s 12 of the Superannuation Guarantee (Administration) Act 1992 as far as their relationship with Aussie Bank is concerned.

Question 2

Part A
Greg was a member of a three person SMSF with his two best friends. All three were trustees of the fund. The SMSF contained the following clause in its trust deed:

A member of this fund can make a Binding Death Benefit Nomination. This will have the effect of binding the trustee regarding the distribution of the member's interest upon their death.

A Binding Death Benefit Nomination must satisfy the requirements in the Superannuation Industry (Supervision) Act 1993 and the relevant regulations.

Greg had been divorced for 6 years, and had a 19 year old child who was a full- time student who lived with him. His wealthy mother also lived with him. His mother paid all the household bills (including grocery bills). Greg's mother, due to her arthritis, had limited mobility so from time to time Greg would drive her around. Greg and his mother had agreed that in a year's time if she was in reasonably good health she would live with her other son in the USA.

During 2017 Greg had written and signed a letter which he titled "Binding Death Benefit Nomination" that he had sent to all the trustees of the SMSF. Under it, he wrote that "I am binding the trustees to distribute 100% of my superannuation interest to my mother". He had this witnessed and signed by his work colleague Linda.

Greg unexpectedly passed away in early 2018. His superannuation account was in its accumulation phase and had a balance of $600 000 (50 per cent taxable component).

1) Advise Greg's child, ex-wife and mother as to:
i) their entitlements to Greg's superannuation interest; and
ii) assuming that each of them got part of Greg's superannuation money, how their entitlement would be taxed in each person's hands. The precise amount of tax payable need not be calculated.

2) Greg's mother, now 72 and retired, wishes to contribute to her own superannuation fund. Advise her whether this is possible.