Illegally accessing super early - 09/05/2011
If you set up a self-managed super fund (SMSF) with the sole intent of accessing your super savings early, you are breaking the law.
You should not be accessing your super early to pay off debts, buy a house or go on a holiday. Your super is intended for your retirement or when you become eligible under the other conditions of release.
The ATO is currently assessing all new trustees of SMSFs and contacting new SMSF trustees who present a risk to ensure that they understand their legal obligations as SMSF trustees.
The ATO has warned that they will bring criminal charges against any scheme promoters or trustees who illegally access, or assist others to illegally access, their super early. Last year, two individual trustees received jail sentences of two years for promoting schemes that encouraged individuals to illegally access their super early.
Severe penalties apply for trustees if you illegally access your super early. You will have to pay tax on the money you access early and other penalties may also apply, depending on your involvement in the scheme. In the worst case scenario, if you set up an SMSF and knowingly access your super savings, you may also face a fine of up to $220,000 and a jail term of up to five years.
The ATO cautioned that people who participate in schemes that encourage illegal early release of super may also become victims of identity theft. Some promoters of these schemes have used participants' identities to steal all their super savings.
Article based on ATO's SMSF Newsletter edition 17