Financial burden of COVID sees rise in illegal loans to members
With COVID continuing to place financial stress on businesses and individuals, there has been an uptick in SMSF members illegally accessing money from their funds, an SMSF auditor warns.
Speaking to SMSF Adviser, ASF Audits head of education Shelley Banton said she has been coming across a lot of loans to members in breach of the payment standards, which is a breach of regulation 6.17 of the SISR.
Ms Banton said while a lot of SMSF members took amounts out of super under the COVID-19 early release of super program, which was implemented to support people adversely financially impacted by COVID-19, some have gone beyond this.
“They’ve gone beyond that and they’re helping themselves to super and they’re not repaying it,” she stated.
“Some [SMSF members] have taken money out before they had their determination from the ATO, and some of them had actually taken money out before COVID and had actually put a repayment plan in place to put the money back but stopped that when COVID started.”
In most cases, Ms Banton said trustees are only wiping the cash from their bank accounts as opposed to selling down assets such as property and listed shares.
“We’re just seeing a raid on the bank accounts, not so much assets being sold down to provide that cash, but it’s definitely an ongoing issue,” she said.
“People are still in financial dire straits as a result of COVID and we’re seeing that play out through what’s happening in the super funds so that’s just going to be ongoing.”
With COVID continuing to financially impact a lot of people, Ms Banton said she expects this to continue to be an issue beyond the funds being audited now.
“This will continue to play out throughout 2022. Let’s hope it doesn’t continue in 2023,” she said.
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
