ASIC, Superannuation

Illegal early-access promoter jailed

Illegal early access superannuation

The operator of a scheme providing illegal early access to superannuation benefits has been given a three-year jail sentence.

A 51-year-old man has been sentenced to three years’ imprisonment after he pleaded guilty in Sydney’s Downing Centre District Court to running a scheme involving an SMSF facilitating the illegal early access of superannuation benefits.

The court found Kent Nguyen created, operated and benefited from the Tot Form Super Fund, an SMSF that did not comply with the requirements of the current superannuation legislation.

The offences occurred between 2007 and 2009 and targeted individuals who were in financial difficulty.

The scheme’s operation was to have people who were members of a retail superannuation fund roll their retirement savings benefits into the Tot Form Super Fund. From there the money was distributed to the former retail super members, with Nguyen retaining a significant portion on the understanding they were amounts to be paid to the ATO for tax liabilities.

The sum of money unlawfully exited from the retirement savings system was in excess of $700,000.

According to ATO assistant commissioner Ian Read, the court’s decision demonstrated individuals found promoting and running schemes providing illegal early access to superannuation benefits would be brought to account.

“While the majority of SMSFs do the right thing, this case serves as a reminder that there are severe penalties for those who attempt to cheat the system. Taking your super out from any super fund early without meeting a condition of release, or encouraging others to do so, is illegal,” Read said.

“This case is also an important reminder for people to be aware of their super affairs and their obligations. There are some very limited circumstances where you may be able to withdraw your super early, but generally you can only withdraw your super when you reach preservation age and stop working.”

He issued a warning to SMSF trustees and noted: “Illegally accessing super early will cost people a lot more than the super they access and may get them into trouble as there are serious consequences for withdrawing super before they are legally entitled to do so. These consequences could include declaring the accessed amount as income in their income tax return, administrative penalties and disqualification from being a trustee.”

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