In a note on the ATO website, the Tax Office said that, as more than 80 per cent of SMSFs are registered with the support of a professional, they play a key role in addressing the issue of illegal early access.
“Your professional status in the community means people pay attention to your perspective so take the opportunity to bust myths and help people understand when they can legitimately access their retirement savings from an SMSF,” the ATO said.
According to the Tax Office, SMSF professionals should be on the look out for registrations that don’t “look or feel right for your client”, and question their reasons for setting up an SMSF.
Among the suggested questions are whether they understand what they’re getting into, know when they can legitimately access their super and are aware of the financial costs associated with doing something illegal.
“Non-lodgement and financial difficulties are also warning signals that your clients might be facing difficulties,” the ATO said.
“If you see clients in this situation, reach out and remind them of their obligations and the rules.
“Professionals can use their insights into specific client’s circumstances and help resolve any issues early, as well as making good use of our voluntary disclosure service and lodgment deferral services.”
The Tax Office also suggested that tax and super professionals utilise its fact sheet on illegal access to super as a “starting point for a conversation with your clients” to ensure they understand when a member can legally access their super, while also warning against the dangers of promoters.
It also encouraged professionals to report any promoters of illegal access to super schemes using its tip-off form.
The ATO has made illegal early access to super a priority recently, particularly around newly established SMSFs.
At the SMSF Association conference in February, ATO deputy commissioner of tax Emma Rosenzweig announced that for 2020, the ATO estimated $380 million of super was illegally withdrawn by SMSF trustees.
The figure would have been closer to $500 million, Rosenzweig said, if the regulator had not protected more than $125 million leaving the system as part of its new registrant risk reviews.
In 2021 it was estimated more than $255 million of super was illegally accessed with almost $170 million additional protected at registration.
“This illegal early access estimate allows us to measure the size, scale and trajectory of this risk, as well as gather intelligence to help address this issue and early indicators suggest that illegal early access behaviour is still prevalent in 2022 data,” Rosenzweig said.
The ATO suggests that as accountants we “question [our clients] reasons for setting up an SMSF”.
As not all accountants are not licensed to actually provide advice on the setting up of an SMSF, what does the ATO expect us to do with the client’s answers? We’re not actually allowed to advise them to say it may not be appropriate. I can recommend a FP, but if they’ve made up their mind it’s almost fait accompli.
Yes, I know there are ways we can give guidance to the client without actually providing advice, but they are skating on the edge.
I’ll be happy to help the ATO….when they are happy to help me run my business whilst I look after my long term clients
We need access to the ATO portal for client super information. NCC, TBC, CC etc.
Until then I’m too busy trying to overcome government enforced inefficiency on my business to help them with their desired outcomes.
At the last SMSF conference I questioned ATO staff. They said it’s not even on the agenda. They were very polite about it but it was a policy decision from on high to go and get lost.
Now they want our help????