In the 19/20 financial year, the ATO are placing a compliance focus on the illegal early release of superannuation.
The tax office’s risk models have recently identified a variety of funds which may be subject to early releases. Anybody who has illegally released their super is likely to be contacted by the ATO.
As early release of super is against the law, there are serious consequences for doing so, including:
- Cancellation of fund
- Disqualification of trustees
- Administrative penalties
The most prevalent reasons that somebody may make an early release of their super include:
- Financial stress
- Requiring money in a fast manner
- Being targeted by unscrupulous promoters
- Misunderstanding of how superannuation works.
In most cases, early releases are made from self-managed superfunds, and the fund members are wrongly informed about their ability to release money from the fund. Un-licensed financial advisors are known to provide false information like this to the public. With these ‘too good to be true’ details, they are able to entice individuals into becoming clients of theirs.
However, these unlawful tactics are now being recognised by government bodies and stopped rapidly. In the 2019 financial year, more than 600 newly registered SMSFs were cancelled by the tax office because they were not compliant.
As regulations and law surrounding SMSFs are becoming more stringent, it is more important than ever that you source advice from licensed and experienced financial advisors.
If you have any questions regarding the establishment of a self-managed superfund, you may contact our SMSF team on (03) 8393 1000.