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Retirement

Scammers targeting super: ‘These people could cost you’

By Reporter · June 26 2018
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Retirement

Scammers targeting super: ‘These people could cost you’

By Reporter
June 26 2018
Reading:
egg
egg
egg

Scammers targeting super: ‘These people could cost you’

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By Reporter · June 26 2018
Reading:
egg
egg
egg

Aussie savers should be on high alert against “suburban scammers” promoting illegal early access to super, the Australian Taxation Office has said.

The ATO said scammers are targeting small and medium-balance super fund members, encouraging them to access their super early in order to pay off debts, take a holiday, purchase a car or send money to family overseas in need.

According to the ATO, promoters promise they can organise early access for a fee and prompt victims to fill out blank forms and provide identity documents.

“Attempting to access your super early in this way is illegal, and people need to be aware of the financial dangers of falling prey to these promoters,” deputy commissioner James O’Halloran said.

“These people could cost you a big part of your hard-earned retirement savings.”

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He said scammers have people involved in local community and cultural groups in their cross-hairs, along with those who haven’t previously engaged with their super.

“While we have seen these promoters using word of mouth and focused in some geographic areas, such as western Sydney, and among some communities, we believe it is not widespread at this stage – but it is important for the ATO to get this warning out as early as possible, given the significant loss people could face to their retirement savings,” Mr O’Halloran said.

The ATO reminded Australians to be wary of people purporting to offer early access to super, and avoid signing any documents or providing any personal details.

As it stands, super can generally only be accessed upon turning 65, reaching preservation age, or under extenuating circumstances.

What does it look like?

In the ATO’s case study, a 45-year-old super fund member, John, wants to settle some outstanding bills and send money to family in need overseas.

A friend at work tells him about a person, Mark, who can help him tap into his $60,000 in super for a fee.

Upon Mark’s advice, John shares his personal details and Mark sets up a self-managed super fund with John’s $60,000 super balance. Mark charges a $1,000 fee for this and John begins withdrawing money from his SMSF account to pay his bills and send money overseas,

However, as John was ineligible for early access, his SMSF is treated as assessable income by the ATO and is taxed at John’s marginal tax rate.

He also suffers an administrative tax shortfall penalty at 75 per cent for disregarding superannuation law. This penalty comes to $15,000 and John is disqualified from being a SMSF trustee.

Scammers targeting super: ‘These people could cost you’
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