Hundreds Disqualified in ATO’s War on Self-Managed Super Scams

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Hundreds of millions of dollars have been safeguarded through the Australian Tax Office’s relentless efforts to halt unlawful access to retirement savings through self-managed superannuation funds.

Justin Micale, the assistant commissioner of the ATO, declared that “illegal early release” was a primary target for the Self-Managed Super Fund enforcement squad.

“We’ve increased the number of trustees that we’ve disqualified. We’ve also imposed superannuation administrative penalties, and where members have withdrawn those amounts, we’ve ensured that they’ve paid additional tax penalties and interest on those amounts illegally withdrawn.” Mr Micale said.

Superannuation can only be accessed when individuals reach their preservation age determined by birthdate, either after retirement or transitioning to it.

People may also withdraw savings under unique cases such as intense economic difficulty or a terminal medical diagnosis.

The Australian Tax Office (ATO)has seen a sharp spike in people taking out funds unlawfully. More individuals were disqualified for making illegal early withdrawals within six months of this financial year than combined in the last fiscal year.

According to Mr Micale, in the first half of this financial year alone, over 280 trustees were barred for unlawfully withdrawing superannuation funds – resulting in a combined $6 million being paid as administrative penalties and extra taxes. It increased from 2021 to 22 when 250 trustees faced similar charges amounting to $5.4 million.

If people enter the superannuation system but then neglect to meet their first payment obligation, it’s a red flag that something is amiss. In the last eighteen months alone, ATO took preventive action and protected over two hundred million dollars from being illegally removed from the platform.

We have a preventative process in place, where we risk assessing all SMSF registrants to ensure that we’ve got trustees entering the system for the right reasons. For those that haven’t heeded those warnings, we’ve ensured that there are consequences for their action,” Micale added.

The repercussions can be extreme for trustees who illegally grant access to superannuation funds. An individual trustee may receive a penalty of up to $504,000 plus five years’ imprisonment; corporate trustees have been fined a staggering $2.52 million for similar transgressions.

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