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Illegal access nets $637 million

The ATO has found $637 million of superannuation savings has left the system due to illegal early access carried out through SMSFs.

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The figures were released by the regulator today at the SMSF Association National Conference 2024 in Brisbane, where ATO superannuation and employer obligations deputy commissioner Emma Rosenzweig provided the first report on an illegal early access estimate project revealed late last year.

“Recently it was announce for the first time that we have found for the 2019/20 year an estimated $381 million of super has been illegally withdrawn by trustees of SMSFs,” Rosenzweig said.

“This figure would have been half-a-billion dollars if we hadn’t protected over $125 million leaving the system as part of our new registrant program.

“In the 2020/21 year, we estimate over $256 million of super has been illegally accessed, with almost $170 million additional that was protected at registration.”

“These are large amounts of money and they don’t include prohibited loans across those two years, so a total of $637 million of superannuation savings has left the system illegally through SMSFs.”

She added prohibited loans were also of concern and in each of the two financial years mentioned, SMSFs entered into more than $200 million in prohibited loans each year, but 75 per cent were repaid.

Newly established SMSFs were more likely to engage in illegal early access or prohibited loans compared to established funds and around two-thirds of the $930 million involved in illegal access or loans over the two years came from people entering the system with no genuine intention to run a fund, she noted.

She said the ATO formed its estimate using audit reports and examining funds that had yet to lodge an annual return and would continue to do so each year as the regulator remained concerned illegal early access was ongoing.

“We looked at all auditor contravention reports of funds that have lodged in those two years where those reports had noted a contravention that could amount to illegal early access and then for those SMSFs that have not lodged, we undertook a random inquiry program and a statistically valid sample,” she said.

“Through the results of both of those we have come up with this estimate across the entire population.

“So will we be doing it every year? Yes.

“We do see already in 2021/22 there are indicators that suggest that illegal early access is still prevalent. We continue to see many new trustees entering into the system with the sole intent of raiding their retirement savings, sometimes facilitated by promoters charging a large fee.”

 

 

Jason Spits
February 21, 2024
smsmagazine.com.au

 


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David Forrest

Director
BEc (Acc), MBA, CPA, FFin

David has been in the Financial Services Industry for nearly 30 years. He was one of the founding Directors of the successful Financial Planning and Stockbroking Practice, Henderson Gregory Forrest, for a decade. Prior to that, he held senior roles in companies such as ING, KPMG Accountants and AMP. David was previously Chairman of OAMPS Superannuation Trustee Board and currently serves as an independent Board Director for several companies.

David’s extensive experience in all forms of superannuation, including Self Managed Super Funds (SMSF), Defined Benefit Funds, retirement funding through Account Based Pensions, stockbroking with a focus on Direct Share Investment, Taxation/Remuneration Planning, Centrelink, Aged Care and business management, equip him to advise expertly on all aspects of Financial Advice.

Those with a particular interest in superannuation/SMSFs, direct share investment, salary packaging or applying for the Centrelink Pension will find his knowledge and ability in formulating and implementing creative, logical and simple wealth creation strategies a valuable asset.

David maintains a strong personalised client service focus, providing tailored solutions for clients.

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David Forrest is an Authorised Representative of Integrity Financial (SA) Pty Ltd ABN 16 133 921 187 — AFSL No 334846

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Michelle Forrest

Business Finance Manager
B Bus (Acc), CPA

Michelle’s career has spanned across the Financial Services, Retirement Living and Aged Care industries working in the private sector, not for profit and more recently with the state government for over 20 years. Her experience extends to many facets of the financial services industry, having worked in superannuation administration, technical support and financial planning practice administration.

Commencing with AMP and subsequently working in commerce and accounting roles with companies such as Brambles, Adelaide Bank Retirement Services, ECH Inc and SA Health and Wellbeing, Michelle returns to financial services after working in practice financial management at Henderson Gregory Forrest. This wide range of experience from senior accounting and management roles has provided Michelle with a strong background in business administration.

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Jasmine has worked in the financial services industry for over 12 years in all areas of client administration, working with David since 2013.

Jasmine has extensive knowledge and experience in client service including implementation of advice, portfolio reporting, assisting with the establishment of Self Managed Super Funds (SMSFs), term deposit management and a long history of helping clients with their enquiries.

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Merrilyn has worked in the financial services industry for over 11 years in all areas of client administration, and is a new addition to our client services team, returning from Melbourne to join the team in June 2019.

Merrilyn has extensive knowledge and experience in client service including implementation of advice, managed fund administration, assisting with the establishment of Self Managed Super Funds (SMSFs) and process improvement for the previous practices she has worked with. Merrilyn’s experience with direct shares constitutes the other part of our administrative support for direct equity investments.

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