Merchant and Commissioner of Taxation

This matter concerned an application by Mr Merchant to set aside a decision by the Commissioner of Taxation made under section 126A(2) of the *Superannuation Industry (Supervision) Act 1993* (Cth) (SISA) to disqualify him from acting as a trustee of self-managed superannuation funds. The Commissioner's decision was based on findings that Mr Merchant had contravened sections 34(1), 62(1), and 63(1) of the SISA.

The primary legal issues before the court were whether Mr Merchant had contravened the specified provisions of the SISA, and if so, whether he was a fit and proper person to continue acting as a trustee. Specifically, the court had to consider the requirements for formulating, reviewing, and giving effect to an investment strategy under regulation 4.09(2) of the *Superannuation Industry (Supervision) Regulations 1994* (Cth) and whether Mr Merchant's actions in relation to certain transactions, including the sale of shares in Plantic Technologies Ltd and the acquisition of Billabong shares by the Gordon Merchant Superannuation Fund (GMSF), complied with these requirements.

The court reasoned that while the investment strategy itself must have regard to the matters outlined in regulation 4.09(2), the SISA and its regulations do not impose a direct requirement for a trustee to reconsider each of those specific factors in making every individual investment decision. Instead, the trustee must "give effect" to an investment strategy that has been formulated with due consideration of those matters and must review that strategy regularly. In this instance, the court found that the investment strategy in place at the time of the relevant transactions, the 2012 Investment Strategy Statement (2012 ISD), had been formulated with consideration of the fund's circumstances and the factors listed in regulation 4.09(2). Crucially, the court noted that Mr Merchant undertook the transactions in accordance with a proposal put forward by the superannuation fund's advisor and that there was no material suggesting he was informed of the possible risk of breaches of the SISA.

Consequently, the court set aside the Commissioner's decision to disqualify Mr Merchant as a trustee.