News

ATO, Superannuation

Illegal early release still area of concern for ATO

SMSFs illegal early release

The ATO has flagged an increase in the number of SMSFs being used for illegal early release (IER) of superannuation funds.

The ATO has continued its efforts to restrict illegal early release (IER) to superannuation via SMSFs and took action against more than 800 funds in the most recent financial year.

Addressing attendees at Class Connect 2019 in Sydney this week, ATO SMSF future client experience director Edward Chung said of the 20,578 SMSFs registered in the last financial year, the SMSF regulator had selected 10 per cent of them for compliance reviews, including interviews with trustees.

“As a result of the work we have done, 229 funds had their registration withheld from Super Fund Lookup and were unable to receive superannuation guarantee payments or rollovers from APRA (Australian Prudential Regulation Authority) funds, and 609 newly registered SMSFs had their registration cancelled,” Chung said.

“Around 40 per cent of cases we did pick up were stopped by us and this meant $100 million was prevented from leaving the superannuation system.”

The statistics presented by Chung mirror those from ATO superannuation assistant commissioner Dana Fleming, who told the SMSF Association conference in February that, at that time, 123 funds had their details withheld from Super Fund Lookup, 329 newly registered SMSFs had their registration cancelled and $45 million had been prevented from leaving superannuation funds.

Chung said most cases of IER were due to people wanting quick access to their superannuation funds, but third-party promoters were also having an impact.

“The other driver, and we are seeing this more frequently, is that people are being targeted by promoters. They prey on individuals who know little or nothing of SMSFs and it is not easy to identify promoters – they don’t come knocking on our doors,” he said.

He said the ATO had, however, taken legal action against one promoter to stop them providing any form of advice on SMSFs and used social media and warnings in local media to prevent another promoter from attracting consumers.

During his address, he also flagged the ATO would continue to investigate the misuse of SMSF auditor numbers after finding a high rate of misuse in a compliance program undertaken earlier this year.

Copyright © SMS Magazine 2019

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital