POLICY OF INSURANCE. SMSF Trustee Administrative Penalties Insurance and SMSF Tax Audit Insurance Who we are

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1 POLICY OF INSURANCE SMSF Trustee Administrative Penalties Insurance and SMSF Tax Audit Insurance Wh we are The Hllard Insurance Cmpany Pty Ltd (Hllard), ABN , is an Australian licensed insurer, regulated by the Australian Prudential Regulatin Authrity and licensed by the Australian Securities and Investments Cmmissin, AFS Licence N Hllard is the insurer and is respnsible fr this plicy. CreSuper Insurance Pty Ltd (CreSuper), ACN , is an Authrised Representative f Hllard (AR N ). Hllard has prvided authrity t CreSuper t enter int and administer this insurance including handling and settling claims under this plicy as agent fr the insurer. Wh is cvered under this plicy? SMSF Owners Alliance Limited (trading as SISFA) (SISFA) ABN , is the insured under this plicy. Hllard and SISFA have agreed that in accrdance with Sectin 48 f the Insurance Cntracts Act 1984, plicy cverage under this cntract f insurance is extended t certain current financial members f SISFA, as defined mre fully in the Definitins Sectin within this plicy. Members f this defined grup will have a right t recver under this insurance. This right is subject t that member being within the defined grup. The benefit(s) under this plicy will nt exceed the cverage prvided t SISFA and is n the same bligatins, cnditins and exclusins set ut in this plicy. Eligibility fr cverage under this insurance is cnditinal n a successful applicatin fr membership, including the cmpletin f a circumstance and claims declaratin as part f the membership. Neither Hllard nr CreSuper are parties t the membership applicatin prcess. Any member wh wishes t exercise a right t recver frm Hllard under this plicy needs t read this dcument carefully because the insurance cver prvided is subject t terms and cnditins. We rely n members t read this dcument. As a member, yu represent t us that yu have dne s and that yu agree t be bund by the terms and cnditins f the insurance. Claims Made Plicy Ntice in accrdance with Sectin 40 f the Insurance Cntracts Act, 1984 This plicy is a claims made and ntified liability insurance plicy. This means that the plicy nly cvers claims which arise frm circumstances cmmitted, r alleged t have been cmmitted, after the retractive date shwn in the Insurance Certificate and ntified during the plicy perid. In accrdance with Sectin 40(3) f the Insurance Cntracts Act 1984, if the insured becmes aware during the plicy perid f any insured ccurrence r fact which may give rise t a claim under this plicy, then prvided this is ntified t CreSuper befre the end f the plicy perid Hllard may nt refuse indemnity in respect f any claim arising, ntwithstanding the plicy perid has expired. This right arises under legislatin. CreSuper Plicy f Insurance 1

2 What des the insurance cver? This insurance plicy prvides cver t: Individual Trustees r Crprate Trustees f Self-Managed Superannuatin Funds (SMSF) fr administrative penalties incurred under Sectin 166 f the Superannuatin Industry (Supervisin) Act 1993 (SISA). SMSFs fr csts incurred in preparing fr an Australian Taxatin Office directed cmpliance and tax audit. Full details f these tw cvers are mre fully described in Sectins 1 and 2 belw. Cst f this insurance SISFA pays the premium, taxes and gvernment charges (csts) t Hllard fr this plicy. Cverage is extended t financial members as a benefit f membership f SISFA. A prtin f membership fees paid by members t SISFA is used t pay these csts. Plicy f insurance This plicy sets ut the terms, cnditins and exclusins n which Hllard, as insurer, agrees t insure SISFA financial members in cnsideratin f payment f premium by SISFA. When reading the plicy please nte that sme wrds are specifically defined. There is a list f these defined wrds in the Definitins Sectin with this plicy. Sectin 1 - SMSF Trustee administrative penalty cver Hllard agrees t indemnify members f SISFA fr administrative penalties levied against them under Sectin 166 f the Superannuatin Industry (Supervisin) Act 1993 prvided that the financial member has ntified CreSuper f the claim during the plicy perid and it arises frm the member acting in a prfessinal capacity as an Individual Trustee r Crprate Trustee f a Self-Managed Superannuatin Fund. Limit f indemnity The maximum we will pay in respect f any claim(s) fr an Individual Trustee r Crprate Trustee, in any ne plicy perid, is limited and shwn in the Insurance Certificate, subject t the payment f an excess f $500 which will be deducted frm any claim payment t a member. The limit shwn n the Insurance Certificate is the ttal limit f Hllard s indemnity t each member in respect f their claims referable t the plicy perid. With the exceptin f cverage under Sectin 2 f this plicy, there is n cverage fr prfessinal r any ther csts f a member cmplying with any directin r inquiry by the Australian Tax Office, (ATO), preparing r crrespnding with the ATO r defending any alleged breach under the SISFA legislatin including cmpliance csts with an educatin ntice issued by the ATO. Exclusins Hllard will nt pay any claim under Sectin 1 arising frm: previusly knwn facts r circumstances which a member is aware f, which breaches the SISA legislatin and/r may lead t an audit by the ATO resulting in an administrative penalty under Sectin 166 f SISA; facts actual, r alleged, which were knwn r ught reasnably t have been knwn t the member prir t the cmmencement f the plicy perid if the member knew that thse facts r circumstances might give rise t a claim; actual r alleged facts which culd have been, r can still be, ntified under any ther insurance existing prir t the cmmencement f the plicy perid; CreSuper Plicy f Insurance 2

3 fact r matter referred t in the member s prpsal (incrprated in SISFA s applicatin fr membership), r ntified under any previus similar insurance that was in place prir t the cmmencement f the plicy perid; fraudulent, dishnest and wilful cnduct by a member which may give rise t a claim under SISA legislatin r which is in any way cnnected with the member: gaining any persnal prfit r advantage t which they were nt legally entitled, having imprperly benefited frm any securities transactin as a result f infrmatin that is/was nt available t ther sellers r purchases f such securities, cmmitting any dishnest, fraudulent, criminal r malicius act, r cmmitting any wilful vilatin r wilful breach f any statute r regulatin. This exclusin will nly apply if a judgement establishes that the relevant cnduct did in fact ccur r if there is any admissin t the relevant cnduct by the member; any administrative penalty arising ut f, r is in any way cnnected with; Cnditins a refusal r failure t cmply with any request made by the ATO; r a member causing any imprper, unwarranted r unjustified delay. The fllwing cnditins apply t Sectin 1: Ntificatin must be given t CreSuper within 28 days f the receipt f ntificatin frm the ATO that a breach under the SISA legislatin may have ccurred, which may result in an administrative penalty under Sectin 166 f the SISA. CreSuper retains the right t seek clarificatin frm the ATO in relatin t any investigatin relating t a breach f SISA legislatin where an administrative penalty under Sectin 166 f SISA may arise. In the event that CreSuper seeks t crrespnd with the ATO in these circumstances, the member must prvide an apprpriate authrity required by the ATO t enable CreSuper t enter int discussins with the ATO in relatin t any such investigatin. Sectin 2 - SMSF Cmpliance and Tax Audit Csts cver Hllard agrees t indemnify an insured SMSF fr the reasnable and necessary prfessinal csts incurred by the SMSF in respnding t an audit r investigatin by the ATO that is first ntified during the plicy perid. We nly d this if the audit relates t the SMSF s liability t pay tax r a cmpliance breach f the Subsectins listed (Items 1 t 17) within Sectin 166 f SISA and the Individual Trustee(s) r Crprate Trustee(s) f the SMSF being audited is/are financial members f SISFA. Limit f indemnity The maximum we will pay in respect f any claim(s) under Sectin 2 in any ne plicy perid, is limited and shwn n the Insurance Certificate, subject t the payment f an excess f $500 which will be deducted frm any claim payment n behalf f the SMSF. The limit shwn n the Insurance Certificate is the ttal limit f Hllard s indemnity t each SMSF during a plicy perid, regardless f hw many members are retained by that SMSF as either Individual Trustees r Crprate Trustees. With the exceptin f cverage under Sectin 1 f this plicy, there is n cverage fr any fine r penalty levied by the ATO arising frm such tax audit r any Civil Penalties, (r criminal cnsequences) under Part 21 f SISA. CreSuper Plicy f Insurance 3

4 Exclusins Hllard will nt pay any claim under Sectin 2 arising frm: Previusly knwn facts r circumstances which a SMSF is aware f which may lead t an audit by the ATO; Facts actual, r alleged, which were knwn r ught reasnably t have be knwn t the member engaged by the SMSF prir t the cmmencement f the plicy perid if the member knew that thse facts r circumstances might give rise t a claim; Actual r alleged facts which culd have been ntified under any ther insurance existing prir t the cmmencement f the plicy perid r which still can; Fact r matter referred t in the member s prpsal, (incrprated in SISFA s applicatin fr membership), r ntified under any previus similar insurance cver that was in place prir t the cmmencement f the plicy perid. Fraudulent, dishnest and wilful cnduct by a member in their cnduct as either an Individual Trustee r Crprate Trustee which may give rise t an ATO audit cnnected with: gaining any persnal prfit r advantage t which they were nt legally entitled; having imprperly benefited frm any securities transactin as a result f infrmatin that is/was nt available t ther sellers r purchases f such securities; cmmitting any dishnest, fraudulent, criminal r malicius act; r cmmitting any wilful vilatin r wilful breach f any statute r regulatin. This exclusin will nly apply if a judgement establishes that the relevant cnduct did in fact ccur r if there is any admissin t the relevant cnduct by the member. Any subsequent audit arising ut f, r is in any way cnnected with: a refusal r failure t cmply with any request made by the ATO, r a member causing any imprper, unwarranted r unjustified delay; The impsitin f any tax, fines, penalties, curt csts, penalty tax r interest; Csts incurred after cmpletin f the ATO audit r ATO investigatin; Csts frm audits r investigatins under Australian Gvernment custms legislatin; Csts frm arising frm audits r investigatins where any surce f incme f the SMSF received r earned, is utside f Australia; any fraud r fraudulent act r missin cmmitted by any fficer f the SMSF; audits r investigatins which result in the SMSF, r any persn acting n behalf f the SMSF, becming aware f any errr r deficiency in any return f incme r ther dcumentatin supplied t the ATO and failing t ntify the ATO withut delay. Cnditins The fllwing cnditins apply t Sectin 2: Taxatin and ther returns f the SMSF must be ldged with the ATO within the time limits applicable t thse returns as prescribed by statute, r thrugh extensin f time granted by the ATO. Full and cmplete disclsure f all assessable incme (including capital gains) f the SMSF is required in accrdance with all relevant Gvernment legislatin. In the event f a claim arising: the Individual Trustee r Crprate Trustee member must, at all times, keep CreSuper fully and cntinually infrmed f all material develpments in relatin t any claim under Sectin additinally, and in relatin t any audit r investigatin; CreSuper Plicy f Insurance 4

5 all necessary and reasnable steps must be taken by the Individual Trustee r Crprate Trustee member t minimise any delays and the amunt f any csts incurred r likely t be incurred in cnnectin with any audit; CreSuper r their duly appinted agent may undertake their wn investigatin int any matter which is, r may be relevant t the claim; and the Individual Trustee r Crprate trustee must ensure that the SMSF s accuntant, registered tax agent and/ r slicitr cperates with CreSuper and where necessary prvide assistance in relatin t any claim r with any ther matter requiring cnsideratin by the ATO which is, r may be the subject f a claim. Cnditins applicable t Sectins 1 and 2. Jurisdictin and chice f law This insurance is gverned by the law f New Suth Wales, Australia. All parties agree t submit t the exclusive jurisdictin f the curts f New Suth Wales and this chice f law. Cancelling the insurance SISFA may cancel this insurance at any time by advising CreSuper in writing that they wish t cancel this plicy. SISFA agree and undertake t cntact all members wh have access t this insurance as a member and advise them f the actual date f cancellatin and the cnsequence f n cver frm this date (unless a claim circumstance has been ntified). Hllard may cancel this insurance where permitted by the Insurance Cntracts Act. Reasns fr cancellatin may include nn-payment f premium by SISFA. Hllard relies n SISFA t advise any member accrdingly and t prmptly update its website and in all cntracts and cmmunicatin t their members. Definitins Administrative penalty means a penalty levied against a member in accrdance with Sectin 166 f the Superannuatin Industry (Supervisin) Act, ATO means the Australian Tax Office. Cmpliance Audit means an audit f insured which identifies a penalty levied by the ATO under the table f Prvisins f this Act within sectin 166 f SISA. CreSuper means CreSuper Insurance Pty Ltd (ACN ), acting as agent fr the insurer, Hllard. Csts means prfessinal fees paid t accuntants r registered tax agents, wh are nt the member s emplyees, fr wrk undertaken in cnnectin with an ATO audit r investigatin. Hllard means The Hllard Insurance Cmpany Pty Ltd (ABN ), AFS Licence N Insurance Certificate means the dcument prvided and attached t this plicy r any insurance certificate which subsequently replaces it during the plicy perid. Insured means SISFA. Investigatin means a frmal criminal, administrative r regulatry investigatin, examinatin, hearing r inquiry by the ATO int the member. Member means: an individual that is a trustee f a SMSF; r a directr f a cmpany that is a crprate trustee f an SMSF, but nly in relatin t liabilities incurred arising frm their directrship f the cmpany that is a crprate trustee f an SMSF; and a current financial member f SISFA, having cmpleted a prpsal fr this insurance and is cmpliant with all rules and regulatins f membership. Plicy perid means the perid f insurance specified in the Insurance Certificate. SISA means the Superannuatin Industry (Supervisin) Act, CreSuper Plicy f Insurance 5

6 SISFA means Self-managed Independent Superannuatin Funds Assciatin Limited ABN , the insured. Tax audit means an audit f an insured s liability t pay tax (fllwing the ldgement f a return) fr that tax. Tax audit ntice means any written ntificatin by the ATO regarding the insured s actual r alleged bligatin t pay tax. Making a claim T either advise a circumstance frm which a claim may arise r make a claim under this insurance cntact CreSuper as a matter f pririty. Phne (07) claims@cresuper.cm.au Pstal Address: PO Bx 779, Spring Hill QLD 4004 Duty f Disclsure Befre entering int an insurance cntract, an insured has a duty f disclsure under the Insurance Cntracts Act If Hllard asks yu, as an insured, questins that are relevant t ur decisin t insure yu and n what terms, yu must tell us anything that yu knw, r culd reasnably be expected t knw, may affect ur decisin t insure yu and n what terms. Yu have this duty until we agree t insure yu. Yu have the same duty befre yu renew, extend, vary r reinstate an insurance cntract. Yu d nt need t tell us anything that: reduces the risk we insure yu fr; r is cmmn knwledge; r we knw r shuld knw as an insurer; r we waive yur duty t tell us abut. If yu d nt tell us smething If yu d nt tell us anything yu are required t, we may cancel yur cntract r reduce the amunt we will pay yu if yu make a claim, r bth. If yur failure t tell us is fraudulent, we may refuse t pay a claim and treat the cntract as if it never existed. Financial Claims Scheme Hllard is authrised under the Insurance Act (Cmmnwealth) t carry n general insurance business. This Act cntains prudential standards and practices t ensure that the financial prmises made by Hllard are met. The prtectin prvided under the Federal Gvernment s Financial Claims Scheme applies t Hllard. This Scheme prtects certain insureds and claimants in the event f an insurer becming inslvent. In the unlikely event f Hllard becming inslvent yu may be entitled t access the FCS, prvided yu meet the eligibility criteria. Mre infrmatin may be btained frm the Australian Prudential Regulatin Authrity at r their htline n General Insurance Cde f Practice Hllard is a signatry t the General Insurance Cde f Practice. The bjectives f the Cde are t: prmte better, mre infrmed relatins between insurers and their custmers; imprve cnsumer cnfidence in the general insurance industry; CreSuper Plicy f Insurance 6

7 prvide better mechanisms fr the reslutin f cmplaints and disputes between insurers and their custmers; and cmmit insurers and the prfessinals they rely upn t higher standards f custmer service. Yu can btain a cpy f the Cde frm the Insurance Cuncil f Australia website insurancecuncil.cm.au Privacy Hllard values yur privacy. In cnnectin with this insurance: persnal infrmatin is cllected directly frm yu r, where that is nt reasnably practical, frm ther surces; persnal infrmatin is cllected fr administering this insurance; assessing and paying claims and fr perfrming administrative peratins (including fr example accunting, risk management and staff training); persnal infrmatin may be disclsed t third parties in cnnectin with the abve purpses, including t reinsurers, related cmpanies, advisers, persns invlved in claims, external claims data cllectrs and verifiers, ur emplyees, agents and ther persns where required by law. By accessing this insurance cver as a member f SISFA yu cnsent t the abve. Yu have a right t access and crrect yur persnal infrmatin held by Hllard and CreSuper. When SISFA prvides persnal infrmatin abut members, Hllard and CreSuper rely n the SISFA t have made r make members aware: that it will r may prvide their infrmatin t us; f the types f third parties t whm the infrmatin may be prvided t; f the relevant purpses we and the third parties we will disclse it t will use it fr; and f hw they can access it. If yu have a cmplaint abut a breach f yur privacy r have any ther query relating t privacy, please cntact us. Cntact Details CreSuper Phne (07) admin@cresuper.cm.au Pstal Address: PO Bx 779, Spring Hill QLD 4004 Hllard Phne: +61 (2) Lcked Bag 2010, St Lenards NSW 1590 CreSuper Plicy f Insurance 7