The Australian Taxation Office (ATO) has told taxpayers to be cautious about any schemes offering early access to retirement savings entitlements through the use of self managed superannuation funds (SMSFs).
It is particularly concerned that many of these arrangements are targeting specific individuals seen as being more susceptible to these proposals.
“We have recently identified an increase in these arrangements targeted at people from non-English speaking backgrounds, particularly in the western suburbs of Sydney,” ATO commissioner Michael D’Ascenzo said.
“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 implications.”
The regulator reiterated that these schemes are illegal and that early access to superannuation entitlements are only made in cases of severe financial hardship or on compassionate grounds.
The ATO also emphasized that even if someone were to apply for the legitimate early release of super, it was not necessary for them to obtain the services of a third party to facilitate the arrangement.
Furthermore, D’Ascenzo encouraged people who have already been involved in these schemes to immediately inform the ATO about the situation.
“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,” he said.
Organisers of the illegal early access schemes face criminal prosecution.
All of the details of this warning are contained in ATO Taxpayer alert 2009/1.
