ATO warns against illegal SMSF scheme

illegal SMSF scheme

A new illegal scheme targeting SMSF trustees could expose them to civil and criminal actions and put their retirement savings at risk.

The ATO has highlighted an illegal scheme aimed at SMSF trustees and warned taking part in such an arrangement could place their superannuation at risk.

In an update on its website, the regulator urged trustees to be wary of the scheme, which claimed to provide a way to avoid paying tax liabilities, noting such an arrangement could result in civil and criminal actions and expose their retirement savings to risk.

“While it is important to plan for your retirement and look for ways to maximise your retirement assets and income, it is also important to remind yourself what you can and cannot do,” it stated.

“We have recently identified a new scheme where SMSF trustees were informed that they can set up a new SMSF to roll over the fund balance from the old SMSF and then liquidate their old SMSF in an attempt to avoid paying potential tax liabilities.

“If you believe you have been approached by a promoter of a retirement planning scheme, we recommend seeking a second opinion from a registered tax agent or appropriately qualified financial adviser. You should also report the promoter to the ATO.”

In a separate update on its website, the regulator reminded SMSF trustees of the need to open and hold a bank account in the name of the fund and that its details are correctly recorded with the ATO.

“You need to open a bank account in your fund’s name to manage its operations and accept contributions, rollovers of super and income from investments. This account is used to pay the fund’s expenses and liabilities,” it said.

“If your SMSF does not have a unique bank account, then your member’s retirement benefits may not be protected. If you did not provide your SMSF’s financial institution details when you registered your fund, you must provide this information to us now.”

It highlighted the SMSF bank account had to remain separate from the trustees’ individual bank accounts and any related employers’ bank accounts.

“You don’t have to open a separate bank account for each member, but you must keep a separate record of their entitlement, which is called a ‘member account’. Each member account shows contributions made by or on behalf of the member, fund investment earnings allocated to them and payments of any super benefits,” it said.

Earlier this month, it confirmed it would be contacting SMSF trustees that were yet to lodge their annual returns.

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