THE organisation that for years provided administration for MTAA Super one of the nation's biggest industry superannuation funds is facing a payroll tax investigation for a discrepancy of millions of dollars that it paid in directors fees over a five-year period.
The ACT government, which oversees the collection of payroll tax from businesses registered in Canberra, has also raised concerns over incomplete employee records supplied by the motor trade association.
The MTAA owns the MTAA Super trustee company. Over the years the motoring body has directed a substantial amount of members' retirement savings into the super fund. Until December last year the motoring body also provided administrative support and management of the $5.8 billion fund. Long-serving executive Michael Delaney last year stepped down from his dual role at the head of both MTAA Super and the national motoring body.
MTAA Super last year paid MTAA $8.5 million as part of a service agreement deal.
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 finance regulator the Australian Prudential Regulation Authority.
Earlier this month, 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.
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.
They also highlight an apparent discrepancy between what was actually paid to MTAA's directors and what appeared in the organisation's annual accounts lodged with the Australian Securities and Investments Commission.
"I have grave concerns about MTAA's inability to provide year-to-date payroll and superannuation summaries from the payroll systems," the ACT Revenue Office said in a letter sent in March to MTAA's auditor, PricewaterhouseCoopers.
"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 said.
In the 2010 financial year, MTAA paid $724,957 in directors' fees, according to accounts lodged with the Australian Securities and Investments Commission. But according to the ACT Revenue Office, only $366,933 was declared. The letter also narrowed in on incomplete information on fringe-benefits payments to some staff.
MTAA executive director Richard Dudley confirmed that discussions with the 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 MTAA at the start of this year.
The ACT Revenue Office declined to comment on the letter.
The query is also expected to put the spotlight on the PwC, which has 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 during 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 came in last 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.
Frequently Asked Questions about this Article…
What is the payroll tax investigation involving MTAA about?
The ACT Revenue Office is probing the Motor Trades Association of Australia (MTAA) over a payroll tax discrepancy, flagging about $1.78 million in directors' fees over a five‑year period that were not declared. The office also raised concerns about incomplete employee records, conflicting wage and superannuation summaries and incomplete fringe‑benefits information supplied by MTAA.
How are MTAA and MTAA Super connected and why does that matter for investors?
MTAA owns the MTAA Super trustee company and for years directed a substantial amount of members' retirement savings into the fund. Until December last year MTAA also provided administration and management support to the $5.8 billion MTAA Super. Those close links — and payments between the two entities — mean issues at MTAA could draw extra scrutiny for MTAA Super and its members.
How much did MTAA Super pay MTAA and why is that payment under scrutiny?
MTAA Super paid MTAA $8.5 million last year as part of a service agreement. That payment is notable because of the close relationship between the motoring body and the super fund, and it adds context to regulatory queries focusing on governance, fees and disclosures.
Is MTAA Super being reviewed by APRA and what prompted that review?
Yes. The Australian Prudential Regulation Authority (APRA) launched a review of MTAA Super focused on an apparent lack of currency hedging in late 2008 that left members exposed to losses. The review examines the fund's risk management during that period.
How has MTAA Super's investment performance compared to peers recently?
According to Chant West, the MTAA balanced fund ranked last of the 50 funds it tracks, returning 4.7% for the year to June, which trailed the category average return of 10%.
What role has PwC (PricewaterhouseCoopers) played in the directors' fees matter?
PwC has provided advice on directors' fees for both the motoring group (MTAA) and MTAA Super. The ACT Revenue Office's queries and the fee discrepancies have placed additional spotlight on PwC's role and advice.
What have MTAA and its executives said about the investigations and governance changes?
MTAA executive director Richard Dudley confirmed discussions with the ACT Revenue Office are continuing but declined to comment further because the matter relates to staff entitlements and similar issues. Earlier, long‑time executive Michael Delaney stepped down from his dual role and MTAA Super's chairman John Brumby has outlined a top‑level overhaul of the fund, including a planned exit of Mr Delaney and the retirement of two long‑serving directors.
What should everyday super fund members watch for next regarding MTAA Super?
Members should watch for the outcomes of the ACT Revenue Office payroll tax queries and APRA's review, any formal announcements from MTAA Super about governance or management changes, and updates to the fund's performance and disclosures — all of which could affect member confidence and the fund's oversight.
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