Speaking at the Tax Institute Superannuation Intensive, Micale said that to address these risks, the Australian Taxation Office is deploying a wide range of strategies to prevent, detect and correct inappropriate behaviours.
“The approaches we take don’t stand still; they evolve, and our ability to identify and deal with risks is becoming more sophisticated,” he said.
Micale said ATO data shows the vast majority of SMSF trustees “do swim between the flags”, but those that don’t have a significant impact on the system.
“The ATO’s role as regulator is focused on protecting the integrity of the system by ensuring SMSFs pay the correct amount of tax and operate for the sole purpose of providing retirement benefits to their members,” he said.
“We all know SMSFs are a long-term undertaking; they’re an investment for the future to meet members’ retirement aspirations. The most fundamental rule is, super is there for your retirement.”
He continued that it is not acceptable for hundreds of millions of dollars of retirement savings to be raided out of SMSFs each year, and it is important to recognise “this is the most significant risk for the SMSF sector” as it impacts the financial welfare of the individuals involved and puts pressure on taxpayer-funded pensions.
The major concern of the ATO in relation to SMSFs is illegal early access, an issue that impacts the integrity and reputation of the sector, and as the consequences are significant for the trustee personally and the broader community, the ATO is committed to working with the industry to ensure “trustees are playing by the rules”.
The most recent data released by the ATO showed that $635 million of superannuation left the system illegally over a two-year period, between 2020 and 2021, and that it was new funds that were more likely to engage in this behaviour compared to established funds.
It also revealed that around two-thirds of the total retirement savings at risk relate to individuals entering the system with no genuine intent to run an SMSF.
Micale said prohibited loans are another concern, and in the two years of the ATO analysis, it found SMSFs entered into over $200 million in loans each year.
“While the majority of these loans have been repaid, it’s important to emphasise these arrangements are prohibited,” he said.
To try and address the issues, Micale said the ATO is working on a number of new guides as it has found that many trustees are breaching rules through a lack of knowledge. A new guide in development, the Running an SMSF publication, complements the existing Starting and Winding-up publications and will be available soon.
He said the regulator is also making progress on the development of a new SMSF trustee education course, consisting of several online learning modules based on the life cycle of an SMSF.
