ATO, Compliance, Superannuation

Early release schemes on ATO radar

early access ATO

The ATO is set to step up compliance actions against individuals who illegally access their super early, with severe penalties for those who choose this course of action.

The ATO has issued a stern warning to SMSF trustees and participants engaging in early superannuation release schemes, emphasising the implementation of stricter scrutiny and severe penalties for those caught violating the rules.

At a recent ATO SMSF open forum, ATO SMSF auditor and portfolio director Kellie Grant outlined two common scenarios the regulator has noticed in regards to trustees accessing their super early.

“Unfortunately we are seeing an increasing number of trustees taking advantage of their direct access to their SMSF accounts and using this money to pay for items such as business debts and personal expenses,” Grant said.

“Firstly, new registrants will enter the system purely to illegally access their super, often at the direction of promoters who will charge high fees for their services. And once that money is taken from their SMSF bank accounts, the fund is abandoned and never lodges a return.

“And secondly, illegal early access happens with our existing trustee population unfortunately accessing their super too early. They may stop lodging to avoid detection and then have a contravention reported to us.”

She noted the consequences for illegally accessing superannuation early can be harsh and the regulator is stepping up its actions to ensure compliance among scheme promoters and participants.

“We repeatedly warn people not to go down this path, but for those that don’t heed our warnings, there are major consequences,” she said.

“A trustee who illegally accesses their super could lose all of their retirement savings, pay extra tax penalties and interest and be disqualified as a trustee, which results in their name being published online, in the [Commonwealth Government] Gazette and in our Disqualified Trustees Register.

“Through our compliance actions, this financial year we have disqualified more than 670 trustees and raised more than $12 million in extra tax, administrative penalties and tax shortfall penalties.

“We’re also stepping up our focus on licensed and unlicensed promoters of illegal early access schemes and we do have a number of investigations underway.

“Our scrutiny of those promoting schemes is intensive and involves exchanging information with a number of law enforcement agencies such as ASIC, TPB (Tax Practitioners Board) and state and federal police.

“The sanctions can be quite significant and include the loss of professional licences, significant penalties and criminal prosecution.”

She added the new program for assessing the risk of new SMSF registrants has successfully prevented more than $225 million in retirement savings from being withdrawn from the system.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital