In a statement, the regulator has reminded trustees that superannuation is intended to support people during their retirement and there are only a few situations where early access to super is permitted.
It said illegal early access is the most significant regulatory risk impacting the SMSF sector, with an estimated $250.1 million in illegal early access from SMSFs in the 2021–22 period.
Accessing superannuation early cannot only have a significant impact on an individual’s retirement savings but can also result in additional tax, penalties, and interest.
The Tax Office said to reduce illegal early access through SMSFs, it provides support and guidance on obligations as a trustee, reviews new registrants, and removes non-compliant SMSFs from Super Fund Lookup. If an SMSF is removed from Super Fund Lookup, it cannot receive contributions and may face liquidity issues.
SMSF trustees who illegally release benefits to a member who hasn’t met a condition of release may face administrative penalties and be disqualified as an SMSF trustee.
If a trustee has illegally accessed super or been involved in a scheme promoting illegal early access, they are urged to contact the ATO immediately using its voluntary disclosure service.
Voluntary disclosure and circumstances will be taken into account when determining any penalties.
The ATO will also investigate late or non-lodgments of SMSF annual returns (SARs) as that can be an indicator that SMSF members may be illegally accessing their super early and raises questions about the trustees’ ability to fulfill their obligations and the purpose of having an SMSF.
Furthermore, the ATO added that it will continue to collaborate with ASIC to identify non-compliant funds and take corrective actions. Loans to members are prohibited under the law and can result in significant penalties, regardless of whether repayments are made.
In the 2021–22 financial year, the amount inappropriately withdrawn from SMSFs via prohibited loans was estimated to be $231.7 million.
