With the increase in SMSF entrants the Australian Taxation Office has released a fact sheet to ensure individuals and businesses looking at setting up an SMSF know the rules and regulations to which they must comply.
And to make them aware of the way in which promoters could influence them to withdraw their superannuation early – and illegally.
The ATO said that having a self-managed super fund (SMSF) can be an attractive alternative for managing your super because, it is important that members make not just the right investment decisions but also operate the fund according to legislative requirements.
“An SMSF must be operated for the sole purpose of providing retirement benefits for its members,” the ATO said.
“This means you can’t use funds from your SMSF to pay for personal or business expenses. This is known as illegal early access of super and severe penalties apply.
“There are also rules around what you can invest in when dealing with a related party.”
The fact sheet advises there are only a few reasons that members might be allowed to access their super early and for most people, they can only access their superannuation when they retire and turn 60, tor urn 65 regardless of whether you’re working.
It warns if members illegally access their super early they could lose their retirement savings, pay extra tax, penalties and interest or be disqualified as a self-managed super fund (SMSF) trustee.
“Be careful if someone offers to help you access your super early 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,” the fact sheet states.
“This is not true, it is illegal. 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.”
Additionally, promoters have also been linked to identity theft and can often ask for personal information which could allow them to access the SMSF itself.
The fact sheet is designed to help new entrants to the sector, as well as those who have been operating an SMSF previously to understand the rules on accessing their super.
