The ATO’s various risk assessment procedures have proved very effective as they have helped to retain in excess of $270 million in the superannuation system within the past couple of years.
“In the last 18 months these actions have protected over $270 million in retirement savings from leaving the system illegally,” ATO SMSF regulatory branch assistant commissioner Justin Micale revealed during his presentation at The Tax Institute Superannuation Intensive event held recently.
Specifically, it has been the regulator’s vigilance and, in particular, its scrutiny of individuals looking to establish their own SMSF that have led to this success, Micale said.
“To protect retirement savings, we take preventative measures by risk assessing every individual entering the system. We call this our new registrant program as this assessment seeks to identify higher-risk new registrants and refers them for further scrutiny to ensure they’re not trying to enter the system for the wrong reasons,” he noted.
According to Micale, this program has not been used in isolation to prevent people from withdrawing their retirement savings benefits before it is legal to do so.
“We also use this process, other sources of intelligence and data analysis to identify promoters of illegal early release schemes,” he noted.
To this end, the ATO has recognised several common characteristics possessed by those individuals encouraging and facilitating the illegal early access of superannuation.
“We’ve found promoters can either be licensed or unlicensed and often target people who are in vulnerable communities, under financial pressure and with low financial and super literacy,” Micale said.
“They use various methods to attract people, such as cold calling, social media and face-to-face interactions at shopping centres, workplaces and community groups.”
Micale took the opportunity to reaffirm the regulator’s stance against this type of illegal activity.
“Let me make it clear: promoting illegal early access is unacceptable. Our scrutiny of those engaging in these behaviours will be intensive and the sanctions can be severe,” he said.
“They can include the loss of professional licences, if they have any, significant penalties and criminal prosecutions.”
During the same presentation the assistant commissioner revealed the number of auditor contravention reports had increased over the past two financial years.