In an online update, the ATO said one of its key focus areas continues to be individuals and promoters who register SMSFs with the intent of using the fund to illegally access super benefits.
The ATO stated that in the 2019 financial year, it took action against a third of cases picked up by its risk models.
“We withheld the details of 352 funds from Super Fund Lookup (SFLU), meaning they couldn’t receive payments and rollovers. We also cancelled the registrations of 609 newly registered SMSFs,” it said.
Some of the common drivers for illegal early release, it said, are financial stress, desire to spend on a present-day benefit and people with little or no knowledge of SMSFs being targeted by unscrupulous promoters.
In December last year, the ATO and ASIC shut down an illegal scheme operating in the Coffs Harbour area, which encouraged consumers to roll their superannuation savings into an SMSF and then use those savings to pay off debts, buy a car, start a business, or buy property and do so without paying any upfront fees for the service.
The ATO said it employed social media to target people in the demographic the spruiker was targeting and, with the help of ASIC, had the organisation shut down.
The Tax Office warned individuals that there are severe consequences for them and their fund if they access their super before they are legally entitled to do so, including disqualification as trustee, the fund being made non-complying, administrative penalties and winding up the SMSF and prosecution.
In February this year, ATO assistant commissioner Dana Fleming said one of the areas that the ATO would be focusing on with its risk assessment process for illegal early release is newly established funds that have never lodged a return.
Often, the trustees of the new SMSF are around 36 years old and a while off from retirement age, she said.
Ms Fleming said that in the 2017 financial year, there were about 6,500 funds that were set up and never lodged.
I hope that meaningful penalties are applied against these ‘spruikers’ as a deterrent as it seems to be happening all to often, and its not just a slap on the wrist a small fine.
ASIC will be harsh and give them a fine that cover’s one days profits. Shame they have been doing it for 18 months but “what can you do”