The ATO has reminded SMSF trustees and members that accessing their retirement savings to pay off present-day purchases is illegal and the promoters of schemes encouraging such a strategy are breaking the law.
“Faced with tough times, some people may be thinking about accessing their super early. You may have been approached by a promoter claiming you can use your SMSF to pay off debts, buy a car or pay for a holiday – it’s not true,” the ATO stated in an update on its website.
The update pointed to a fact sheet that outlined when it was legal to access superannuation and the dangers of losing retirement savings, paying extra tax and penalties, and disqualification as an SMSF trustee for illegal early access, which may impact a person’s personal and professional reputation.
“Some people may say they can help you set up an SMSF so you can access your super for reasons such as paying off your credit card, buying a house or to go on a holiday. This is not true, it is illegal,” the fact sheet stated.
“These people (known as ‘promoters’) will often charge you a lot of money, tell you to transfer some or all your super from your existing super fund to the SMSF, tell you that you can use as much as you need for personal expenses.
“These promoters may also ask for your personal information. If you give it to them, they can steal your identity. With your personal information, they can steal your super for themselves.”
The fact sheet urged SMSF trustees to contact the ATO directly if contacted by a promoter and to take no action in regards to any of their recommendations or requests.
On its website, the regulator also advised trustees to make contact if they had engaged in any early release scheme.
“We know the vast majority of SMSFs are doing the right thing, which is important to acknowledge. But as a regulator, our focus is drawn to those who are not,” it said.
“If you have been caught in a scheme and accessed your super early, you should contact us immediately using our voluntary disclosure service. We will take your voluntary disclosure and circumstances into account when determining any penalties.”
Illegal early access has been flagged as a leading area of concern for the SMSF sector by the ATO, which had found $637 million had been withdrawn by fund members during the 2020 and 2021 financial years.
