ATO Warns About Illegal Early Release Superannuation Arrangements

by Mary Swire, Tax-News.com, Hong Kong

13 January 2009

The Australian Taxation Office (ATO) has issued a taxpayer alert warning people to be cautious of arrangements offering early access to super benefits via self-managed super funds.

Tax Commissioner Michael D’Ascenzo said arrangements offering early release of super benefits are illegal and attract significant legal and financial penalties for both organizers and individuals.

“We have recently identified an increase in these arrangements targeted at people from non-English speaking backgrounds particularly in the western suburbs of Sydney,” Mr D’Ascenzo announced, going on to explain:

“I am concerned that people taking up these offers are being misled about the taxation and superannuation implications, and of the illegal nature of these arrangements. Those involved may lose their hard-earned super savings and suffer severe tax complications.”

Early access to super is only granted in cases of severe financial hardship or on compassionate grounds, however people don’t need to pay an organizer to access their super benefits in these situations.

The tax office is working closely with the Australian Securities and Investments Commission (ASIC) in a joint effort to combat these illegal arrangements. Those who organize and promote these arrangements may face criminal charges and prosecution. Previous prosecutions have resulted in significant penalties including imprisonment.

The ATO has urged individuals who have been approached about ways to access super benefits early, or have information about people making such an offer to contact the tax office directly.

“Taxpayers who have entered into such an arrangement and come to us before we contact them for an audit will be entitled to a reduction in any penalties that may apply”, D'Ascenzo concluded.

Recommended