Written by Mary Simmons, Head of Technical, SMSF Association
Scams Awareness Week is the perfect time to highlight the Australian Taxation Office’s (ATO) ongoing efforts to crack down on promoters of illegal early release (IER) schemes. As an SMSF trustee, it’s essential to understand both the ATO’s role in taking action against these promoters and your responsibilities to stay compliant with superannuation laws.
ATO’s Role: Targeting Promoters of Superannuation Illegal Early Release Schemes
The ATO has long warned against the dangers of IER schemes, and they have broad powers to take decisive action against those who promote or facilitate such activities. These powers allow the ATO to take action even if no superannuation funds have been released illegally—just the potential for an illegal release is enough to trigger penalties.
This proactive approach ensures that those who attempt to promote or facilitate illegal activities face severe consequences, including substantial fines and legal action.
Your Responsibility as an SMSF Trustee
While the ATO is focused on penalising those who promote these illegal schemes, you, as an SMSF trustee, have your own set of responsibilities:
- Know the Rules: Knowledge is your best defence. Ensure you understand when you can legally withdraw your superannuation benefits. Early access is only permitted under specific circumstances, such as reaching preservation age and meeting a condition of release like retirement.
- Stay Informed: All members of your SMSF need to be vigilant and ask the right questions. Illegal early release schemes often masquerade as legitimate financial opportunities. Dig deeper – ask whether it complies with the superannuation regulations and seek independent advice if necessary.
- Understand the Consequences: If you withdraw your superannuation early, the amount will likely be taxed at your personal marginal tax rate plus your SMSF may lose its compliance status. Beyond the immediate tax consequences, illegal early withdrawal can significantly reduce the amount of money available for your retirement.
- Seek Specialist Advice: If something sounds too good to be true, make sure you seek specialist advice. The SMSF Association provides a directory of accredited professionals who can offer expert guidance. Visit SMSF Association’s Find a Specialist to locate a qualified SMSF advisor.
- Report Suspicious Activity: If you come across a scheme or promoter that seems suspicious, you have a responsibility to report it. The ATO relies on reports from trustees to help identify and stop illegal operations. To report a scheme:
- Call the ATO’s superannuation hotline at 13 10 20.
- Email Super-[email protected].
The ATO is actively working to eliminate the threat posed by promoters of illegal early release schemes, but your role as an SMSF trustee is just as important. Don’t let your hard-earned retirement savings be jeopardised by something that seems too good to be true. Stay informed, stay safe, and ensure your superannuation remains secure for the future.
Access additional resources that may be insightful this Scams Awareness Week:
Disclaimer: The information contained in this document is provided for educational purposes only, is general in nature and is prepared without taking into account particular objective, financial circumstances, legal and tax issues and needs. The information provided in this article is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should assess its relevance to your individual circumstances. While SMSF Association believes that the information provided in this article is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this bulletin is not considered financial product advice for the purposes of the Corporations Act 2001.