Childcare operators accused of ‘fake children’ fraud seek millions from AFP after case is dropped
ATO disqualifies hundreds over self-managed super scam
An Australian Tax Office crackdown on people setting up self-managed superannuation funds to illegally access their retirement savings has prevented the withdrawal of hundreds of millions of dollars.
ATO assistant commissioner Justin Micale told The Australian Financial Review that “illegal early release” was one of the SMSF enforcement team’s major areas of focus.
More people have been disqualified for illegal early access of super in the first half of the current financial year than were penalised in the entire 2021-22 financial year. Glenn Hunt
“We’ve increased the number of trustees that we’ve disqualified,” Mr Micale said. “We’ve also imposed superannuation administrative penalties, and where members have withdrawn those amounts, we’ve ensured that they’ve paid additional tax penalties and interest on those amounts illegally withdrawn.”
Superannuation can only be withdrawn when fund members reach the preservation age, based on their date of birth, and have either retired or are transitioning to retirement.
Savings may also be withdrawn in limited circumstances if a person is suffering severe financial hardship or has a terminal medical condition.
But the ATO has noticed a rise in people withdrawing money who are not legally allowed to do so.
More people have been disqualified for illegal early access of super in the first half of the current financial year than were penalised in the entire 2021-22 financial year.
Mr Micale said more than 280 trustees were disqualified for illegally accessing superannuation in the first half of this financial year, leading to $2 million in administrative penalties and additional tax of $4 million.
This compares to 2021-22, when about 250 trustees were disqualified for illegal access and charged $3.4 million in administrative penalties and $2 million in extra tax.
An early warning sign that people may have accessed their super illegally is when they enter the system and then don’t meet their first lodgment obligation.
Mr Micale said over the past 18 months, the ATO had taken preventative actions to protect more than $200 million from leaving the system illegally.
“We do have a preventative process in place, which is where we risk assess all SMSF registrants to ensure that we’ve got trustees entering the system for the right reasons,” he said.
“For those that haven’t heeded those warnings, we’ve ensured that ... there are consequences for their action.”
Jail time
Trustees who knowingly allow illegal access to super can incur penalties of up to $504,000 and jail terms of up to five years, or fines of up to $2.52 million for corporate trustees.
People who access their super illegally will be assessed personally on the amount they took out and penalties and interest could be applied.
Mr Micale said the ATO was working with law enforcement agencies to identify the people promoting illegal early access schemes.
“What we find is that these promoters often are targeting vulnerable people under financial pressure, and perhaps with low financial literacy, to encourage them to go down that path,” he said.
Mr Micale said the ATO was also concerned about investment scams, where a person is tricked into setting up an SMSF or using their existing SMSF to invest in a bogus product.
“Our message for people broadly is they need to be extra vigilant, they need to do their due diligence.
“They should be checking when they’re getting financial advice they’re getting it from a registered financial adviser.”
