InvestSMART

MTAA dealt new blow as inquiry looks at tax paid on directors' fees

FEES paid to directors of an organisation that previously administered MTAA Super - one of the nation's biggest industry superannuation funds - are being examined in a payroll tax investigation of discrepancies of millions of dollars over a five-year period.

FEES paid to directors of an organisation that previously administered MTAA Super - one of the nation's biggest industry superannuation funds - are being examined in a payroll tax investigation of discrepancies of millions of dollars over a five-year period.

The investigation of fees paid to directors of the super fund's related motor trade association, also called MTAA, covers a period when the trade association was responsible for administering the superannuation fund.

The inquiry by the ACT Revenue Office, which oversees the collection of payroll tax from businesses registered in Canberra, has also raised concerns over incomplete employee records supplied by the trade association.

Documents from the ACT Revenue Office obtained by BusinessDay raise concerns over $1.78 million in directors' fees over a five-year period that were not declared to the territory's government.

They highlight an apparent discrepancy between what was actually paid to the trade association's directors and what appeared in the organisation's annual accounts lodged with the Australian Securities and Investments Commission.

For example, in the 2010 financial year, the trade association paid $724,957 in directors' fees, according to accounts lodged with the Australian Securities and Investments Commission. However according to the ACT Revenue Office, only $366,933 was declared in directors' fees.

The trade association owns the MTAA Super trustee company and, over the years, the motoring body has directed a substantial amount of members' retirement savings into the superannuation fund. Until December last year, the motoring body also provided administrative support and management of the $5.8 billion fund.

MTAA Super last year paid the trade association $8.5 million as part of a service agreement deal.

Long-serving executive, Michael Delaney, stepped down last year from his dual role of heading up both MTAA Super and the national motoring body.

Given the close links between the two organisations, the developments could represent a further headache for MTAA Super, which has come under a separate investigation from the finance regulator, Australian Prudential Regulation Authority.

Earlier this month, the MTAA Super chairman, John Brumby, detailed a top-level overhaul of the fund. This includes the planned exit of Mr Delaney in November and the retirement of two long-serving directors.

The ACT Revenue Office said in a letter sent in March to the trade association's auditor, PriceWaterhouseCoopers: "I have grave concerns about MTAA's inability to provide year to date payroll and superannuation summaries from the payroll systems ... I advise that the wage records, spreadsheets and information supplied to date contain conflicting information that I have not been able to reconcile."

The letter also narrowed-in on incomplete information surrounding fringe benefits payments to some staff.

The trade association's executive director, Richard Dudley, confirmed discussions with ACT Revenue Office were continuing.

"They've had some queries and we've responded to those queries, but because the matter pertains to staff entitlements and other associated matters, I'm not willing to comment any further," he said. Mr Dudley took charge of the trade association at the start of this year.

The ACT Revenue Office declined to comment on the letter. A spokesman for the ACT Treasurer's office was unable to discuss the matter, saying simply that it was an operational issue.

The query is also expected to put the spotlight on the trade association's auditors, PriceWaterhouseCoopers, which have provided advice on directors' fees for both the motoring group and the super fund.

Earlier this year, APRA launched a review of MTAA Super over an apparent lack of currency hedging in late 2008 that left fund members heavily exposed to losses.

Mr Delaney has been critical of APRA's investigation and previously insisted that the super fund was hedged during the financial crisis.

Recent figures compiled by Chant West show the MTAA balanced fund produced the lowest returns of the 50 funds it tracks. It returned 4.7 per cent over the year to June, trailing the average 10 per cent return for funds in this category.


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