SMSF Association calls for joint effort to tackle early super access

By Newsdesk

February 22 2024
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The SMSF Association is calling on a collaborative approach including the Government, the Australian Taxation Office (ATO), the Australian Securities and Investments Commission (ASIC), and the superannuation industry to mitigate the risks of illegal early access to superannuation funds.

SMSF Association calls for joint effort to tackle early super access

This appeal comes in response to alarming figures showcased in the ATO’s presentation at the Association’s 2024 National Conference, highlighting the significant sums being illegally withdrawn from Self-Managed Super Funds (SMSFs).

Peter Burgess, CEO of the SMSF Association, highlighted the seriousness of the problem, stating, "the ATO’s numbers were a wake-up call that much more needed to be done to prevent individuals illegally accessing their superannuation." The presentation titled "Levelling up SMSF compliance," delivered by the ATO’s Deputy Commissioner Emma Rosenzweig, revealed that $381 million was illegally accessed during the 2019-20 financial year, a figure that decreased to $256 million in the 2020-21 period. Additionally, it was disclosed that the ATO had successfully prevented $126 million from leaving the system in 2019-20, with this figure increasing to $168 million in 2020-21.

Despite these amounts representing a small percentage of total SMSF assets and showing a declining trend, Burgess emphasized the need for the sector to meaningfully address the issue. He expressed support for the ATO’s preventative measures and called for initiatives to further enhance the ATO’s risk profiling of SMSF trustees.

Burgess also pointed out the value of specialist advice for SMSF trustees, noting 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." This view supports the Government’s initiative to improve access to professional advice and underlines the Association’s proposal to allow suitably qualified accountants to provide a limited range of SMSF establishment and structuring advice.

Furthermore, Burgess called on the ATO to expedite the release of guidance material on the taxation treatment and use of Commissioner discretion when super benefits are withdrawn in breach of legislative requirements. He argued that such guidance, alongside increased enforcement action and targeted communication of examples of enforcement action, would serve as a deterrent against instances of illegal access.

Finally, he stressed the importance of the ATO refining its data analysis on illegal superannuation access for future estimates, suggesting that "granular analysis will provide further insights on the motivations and causes of illegal access and will further assist to identify possible solutions." This approach, according to Burgess, is essential to avoid implementing reforms that might not effectively address the risk and could potentially hinder the growth of the sector.

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Retirement