Show download pdf controls
  • Consequences of illegally accessing super

    Illegally accessing your super will cost you a lot more than the super you withdraw. You may face significant financial consequences and lose your retirement savings.

    Any amount you illegally access will be included as income in your tax return, even if you return it to the fund. This means you may pay:

    • additional income tax
    • tax shortfall penalties
    • interest.

    If you've illegally accessed your super you can't return it back into your fund. Any attempt to do so will be considered a new contribution.

    If you provided fraudulent documents to the ATO or your super fund, you will also be liable for penalties for false and misleading statements.

    If a promoter helped you access your super illegally, you can't claim a personal deduction for fees or commissions they take from your super.

    If you participate in a scheme, you may become a victim of identity theft. This is when someone uses your personal details to commit fraud or other crimes. If someone steals and misuses your identity, they could steal your super for themselves.

    If you illegally access your super or have been involved in a scheme promoting illegal early access to your super, contact us immediately. When we consider penalties, we will take your voluntary disclosure and circumstances into account.

    Consequences for SMSF trustees

    If you are an SMSF trustee and you illegally release benefits to a member who has not met a condition of release, you may be liable for administrative penalties.

    You may also be disqualified as an SMSF trustee. If disqualified:

    • you cannot operate as a trustee of an SMSF
    • your name will be published in both the Commonwealth Government Notices Gazette and our trustee disqualification register.

    This means your disqualification will be on public record. This can have an adverse impact on you professionally, personally or financially.

    Promoters of illegal schemes

    The ATO and The Australian Securities & Investments Commission (ASIC) may prosecute promoters of schemes designed to illegally access super. These activities may involve breaches of the following legislation:

    • Superannuation Industry (Supervision) Act 1993
    • Corporations Act 2001
    • Australian Securities and Investments Commission Act 2001.

    Breaches may include:

    • misleading or deceptive conduct
    • giving financial product advice without an Australian financial services licence.

    The ATO may impose civil and criminal penalties, including significant fines and terms of imprisonment.

    Case study – consequences for a promoter of an illegal access scheme

    A Federal Court imposed a $220,000 penalty and a 7-year ban for the promoter of an illegal early access scheme involving SMSFs.

    The ATO, as regulator of the SMSF sector, commenced legal action against the New South Wales woman in 2018 after a tip-off about the suspect establishment of several SMSFs.

    She had set up or intended to set up 35 SMSFs on behalf of 68 individuals between 2016 and 2018. She then helped individuals not yet legally entitled to access their super, transfer their balances to their SMSF so they could illegally withdraw it. This sometimes occurred on the same day.

    Participants in the scheme reportedly used the money to fund personal expenses including home renovations and stamp duty.

    After seeking an initial injunction that placed restrictions on the scheme’s facilitator, the ATO filed an application in the Federal Court seeking:

    • declaratory relief
    • a final injunction
    • payment of a civil penalty.

    This case demonstrates that there are serious consequences for promoters of illegal early access schemes. Super is money set aside to provide for retirement and withdrawing your super without meeting a condition of release can result in long-term financial damage. This can leave people with little or no super for their retirement as well as a significant tax bill on the amount withdrawn.

      Last modified: 11 Jan 2023QC 18810