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A double-digit surge in self-managed superannuation fund registrations during the peak of the COVID-19 crisis will lead the ATO to scrutinise newly established funds for signs of illegal early release.
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Surge in SMSF establishments raises alarm for ATO
17 July 2020
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11 minute read
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ATO acting assistant commissioner, SMSF segment, Steve Keating said that, for the 2019–20 financial year, the ATO processed over 22,000 new SMSF registrations.
In a discussion with the SMSF Association, Mr Keating stated that this is the first time there has been an increase in registrations in the past five years, with the ATO previously seeing a consecutive round of decreasing registrations.
“From January through to April, we saw double-digit growth in registrations,” he stated.
While Mr Keating acknowledged that it is not uncommon to see an increase in registrations during an economic downturn, the registrations in March were particularly high, increasing by 35 per cent.
“March was also when we started to see the impacts of COVID-19, we had lockdowns and employees were concerned about losing their jobs and there were also drops in markets. The government announced its COVID-19 packages and individuals were applying for early release of super, and the cash-flow boost was available to businesses,” he stated.
In May and June, there was a reversal in the trend, he said, with May seeing a 20 per cent decrease in registrations compared with the previous year and June a 4 per cent decrease.
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Mr Keating said SMSF registrations are one of the key areas the ATO monitors for detecting illegal early access to super.
“Our greatest concern remains those people who try to establish an SMSF and enter the system with the purpose of illegally accessing their super. As a result of that, we have an extensive program to risk-assess every individual that enters the system,” he cautioned.
“We’ll be paying particular attention to the lodgement behaviour of those funds that registered during that COVID period. My message is that we’d like to see those SMSFs lodge on time; otherwise, they will be hearing from us.”
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