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Industry and regulators must work collaboratively to tackle millions of dollars leaving SMSFs illegally, says the association.
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Illegal early access numbers ‘a wake-up call for SMSF industry’: SMSFA
21 February 2024
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The ATO has revealed new figures on the scale and trajectory of illegal early access of funds from SMSF accounts, with a total of $380 million illegally accessed from SMSFs in 2020 and $255 million in 2021.
SMSF Association chief executive Peter Burgess said the ATO’s numbers were a wake-up call that much more needed to be done to prevent individuals illegally accessing their superannuation.
Speaking at the SMSF Association National Conference, Mr Burgess said a collaborative approach involving government, the ATO, ASIC and the industry would be needed to reduce the risk of illegal early access.
ATO deputy commissioner Emma Rosenzweig said the ATO’s preventative measures had helped to reduce the amount illegally leaving the system with the ATO preventing $126 million leaving the system in 2019-20, and $168 million in 2020-21.
“We’re encouraged by the preventative measures put in place by the ATO in recent years that are clearly helping reduce the instances of illegal access and we support initiatives that further enhance and strengthen the ATO’s risk profiling of SMSF trustees,” said Mr Burgess.
“Enhanced pre-checking of prospective trustees by the ATO will help further reduce illegal access, and we urge the SMSF industry to remain open-minded to sensible, targeted intervention that upholds the integrity of our sector while not unnecessarily delaying the process for legitimate low-risk individuals.”
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Mr Burgess stated that trustees who receive specialist advice are far more aware of their responsibilities, and, as such, are far less likely to engage in illegal activity.
“The gravity of this issue supports the government’s push to improve access to professional advice and adds weight to the Association’s push to allow suitably qualified accountants to provide a limited range of SMSF establishment and structuring advice,” he said.
“It’s nonsensical that a suitably qualified accountant can provide advice on myriad tax structures but not setting up an SMSF. Nor can they advise someone to not establish an SMSF or to exit an existing SMSF where it is clearly not in the client’s best interests.”
The SMSF Association is also urging the ATO to expedite the finalisation of its guidance material previously put on hold.
“This guidance explains the taxation treatment and use of Commissioner discretion when super benefits are withdrawn in breach of the legislative requirements,” said Mr Burgess.
“The release of this guidance, a greater focus by the ATO on enforcement action, and clear and public targeted communication of examples of enforcement action, will help to deter instances of illegal access.”
He also welcomed the intention of the ATO to further refine its data analysis on illegal access for future year estimates.
“Granular analysis will provide further insights on the motivations and causes of illegal access and will further assist to identify possible solutions.
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