The extent of the problem was highlighted at the SMSFA National Conference in Brisbane on Wednesday by both the ATO and ASIC, and SMSFA CEO, Peter Burgess, said it was a “wake-up call” that much more needed to be done to prevent individuals from illegally accessing their super.
Mr Burgess said it was an issue that the SMSF sector had to confront in a meaningful way, despite the amount released illegally being small as a percentage of total SMSF assets and the figures showing the amount being illegally accessed had fallen.
“We’re encouraged by the preventative measures put in place by the ATO in recent years that are clearly helping reduce the instances of illegal access and we support initiatives that further enhance and strengthen the ATO’s risk profiling of SMSF trustees.”
“Enhanced pre-checking of prospective trustees by the ATO will help further reduce illegal access, and we urge the SMSF industry to remain open-minded to sensible, targeted intervention that upholds the integrity of our sector while not unnecessarily delaying the process for legitimate low-risk individuals.”
He said that SMSF trustees who receive specialist advice are far more aware of their responsibilities, and, as such, are far less likely to engage in illegal activity.
“The gravity of this issue supports the Government’s push to improve access to professional advice and adds weight to the association’s push to allow suitably qualified accountants to provide a limited range of SMSF establishment and structuring advice,” he said.
“It’s nonsensical that a suitably qualified accountant can provide advice on myriad tax structures but not setting up an SMSF. Nor can they advise someone to not establish an SMSF or to exit an existing SMSF where it is clearly not in the client’s best interests.”
Mr Burgess urged the ATO to expedite the finalisation of its guidance material previously put on hold as it explains the taxation treatment and use of commissioner discretion when super benefits are withdrawn in breach of the legislative requirements.
“The release of this guidance, a greater focus by the ATO on enforcement action, and clear and public targeted communication of examples of enforcement action, will help to deter instances of illegal access,” he said.
Finally, Mr Burgess said the SMSFA welcomed the intention of the ATO to further refine its data analysis on illegal access for future year estimates.
“Granular analysis will provide further insights on the motivations and causes of illegal access and will further assist to identify possible solutions.,” he said.
“Without this detailed analysis, it would be inappropriate to implement reforms that over time may prove ineffective in addressing this risk and may stifle the growth of the sector.”
