SMSFs warned on potential rise in illegal early access schemes
One accounting firm fears there may be an increase in disreputable operators enticing trustees with illegal early access schemes in the coming months as COVID continues to place financial pressure on businesses and individuals.
Speaking to SMSF Adviser, H&R Block director of tax communications Mark Chapman said that with some individuals and business owners facing increased financial strain at the moment, some unscrupulous operators might be looking to target these vulnerable people and “entice them into illegal early release of super schemes”.
“Disreputable operators will promise an early release of super even though those individuals don’t meet the eligibility criteria,” said Mr Chapman.
“It’s quite possible we might see that coming out of the wood work over the next few months.”
SMSF professionals, he said, may want to warn clients about some of these operators that target trustees and remind them that they can only access their super where they meet one of the relevant guidelines.
Earlier this month, ASF Audits head of education Shelley Banton said she has already come across instances where SMSF trustees have taken amounts out of their super without meeting the relevant requirements.
“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,” she warned.
Aquila Super partner Chris Levy said that while he hasn’t seen instances where trustees have illegally accessed money from the fund, he has seen an uptick in trustees going out of their way to meet a condition of release such as stopping work, in order to be able to access their superannuation money.
“I suspect SMSF trustees that have broken the law and accessed superfund money illegally have not submitted their 2021 work to their accountant,” said Mr Levy.
“That’s been my experience with other breaches – people don’t want to provide the info until such time that they’ve fixed up the initial breach even if this takes years.”
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.