SMSFs need to be aware of a key requirement of running an SMSF – you cannot withdraw from your fund unless you meet a condition of release. Funds can be withdrawn from superannuation accidentally (i.e. transfer from internal accounts) or intentionally due to many financial pressures such as financial distress. The Australian Tax Office (“ATO”) recently revealed that between 2020 and 2022, more than $630 million of superannuation was illegally withdrawn, with the majority of these performed by newly established funds – some of which were victims of fraud schemes run by “spruikers” and many others with no genuine interest in running the SMSF rather a motivation to access their retirement savings. At Redwood, we would never promote or be part of such a scheme and highlight key compliance areas in running an SMSF in performing administration of the fund.
The ATO has stepped up compliance around illegal access to superannuation with increased surveillance of newly established SMSF by completing audits on SMSF establishments (“early intervention”) and cancelling ABN’s of SMSFs which have not lodged a tax return by the due date.
You must meet a condition of release before accessing super
The increase in illegal access can be associated with the changing economic landscape due to COVID from 2020 to current date where cost of living pressures is placing a significant strain on Australian households. Key causes of illegal access are paying off a personal mortgage, fund renovations, buy a new car or pay for a holiday or a sad and regular issue is gambling debts and domestic violence.
All of the above are society issues which will be a challenge in the coming years with an increase in SGC to 11.5% and high interest rates and high constant inflation impacting the back pocket and take home salaries of Aussies. The ATO with Auditors will most likely detect the illegal access so please be aware of the rules to avoid the heavy hand of the ATO in applying Superannuation Law to illegal access.
Disclaimer – The content has been prepared by Redwood Advisory Pty Ltd without taking account of the objectives, financial situation or needs of a particular individual and does not constitute financial product advice. This article should not be considered personal financial advice as it is intended to provide factual information only.
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