The ATO has issued an update on its website warning people to be wary of schemes targeting Australians to inappropriately use an SMSF.
The regulator said individuals were being urged to start an SMSF for a range of inappropriate and sometimes illegal reasons, reminding anyone considering such a fund that it is a “trust generally run for the sole purpose of providing retirement benefits to its members”.
Reasons people were being targeted to use their SMSF was to steal superannuation from the individual, to convince someone to invest their super money into a fraudulent investment, to get a present-day benefit for the individual or different party and to convince someone to move to a fund so they can access their retirement savings before a condition of release is met.
“You should consider how arrangements you enter affect your SMSF and whether they contravene the tax and super laws. A key issue in many SMSFs are transactions involving parties who are familiar to you and the consequences of not dealing on an arm’s-length basis,” the ATO stated.
“You may risk losing some or all of your retirement savings and receive serious penalties if you enter into a scheme. You could also be disqualified as a trustee of your SMSF, which could result in your fund being wound up,” it said, also cautioning people not to be tempted by ‘too-good-to-be-true’ schemes.
The online guidance added people need to look out for schemes that promote illegal early access and tax-avoidance schemes that encourage people to direct money into their SMSF to inappropriately avoid paying tax.
“We encourage you to seek independent advice from a financial adviser who has no connection to the scheme before you commit to any arrangements,” the update noted.
To help people recognise a scheme, the ATO pointed out the typically common features, such as artificial or contrived arrangements with complex structures around an existing or new SMSF, they involve seemingly unnecessary steps or transactions and invariably sound ‘too good to be true’ and generally are.
The regulator said people should check the ASIC Financial Advisers Register to make sure anybody they are dealing with has a financial licence and to seek a second opinion if in doubt about the legitimacy of a scheme or to contact it directly.
“If you think you’ve been approached by a promoter or caught up in a scheme, contact us immediately so we can help you,” the update said.
