Show download pdf controls
  • Suburban scammers pushing illegal early access to super

    The ATO has become aware of people in some suburban areas of our major cities attempting to encourage others to illegally access their super early to help them to purchase a car; to pay debts; to take a holiday or to provide money to family overseas in need.

    Deputy Commissioner James O’Halloran said that the last thing the ATO wants to see is people’s retirement savings being put at risk by unscrupulous promoters.

    "Attempting to access your super early in this way is illegal, and people need to be aware of the financial dangers of falling prey to these promoters. These people could cost you a big part of your hard-earned retirement savings.”

    The ATO has seen evidence of promoters promising that they can organise access to super (for a fee). They ask people to fill out blank forms and provide identity documentation, while assuring people that these arrangements are legitimate.

    So far the ATO has seen promoters targeting people with small to medium super balances, people involved in local community and cultural groups, and those who may not have engaged with their super at all before being approached.

    Mr O’Halloran said “While we have seen these promoters using word of mouth and focused in some geographic areas, such as Western Sydney, and among some communities, we believe it is not widespread at this stage – but it is important for the ATO to get this warning out as early as possible, given the significant loss people could face to their retirement savings.”

    If you are approached by someone telling you that you can access your super early, or you hear about it from family, friends or work colleagues:

    • do not sign any documents
    • do not provide them with any of your personal details
    • stop any involvement with the scheme, organisation or the person who approached you
    • seek advice from a professional advisor or the ATO.

    Generally, you can only access your super once you turn 65 or when you reach preservation age and stop working. Currently, in Australia, the preservation age is 55 years old for those born before 1 July 1960. It then increases by one year, every year, up to the maximum of 60 for those born after 30 June 1964. There are some very limited circumstances where you can legally access your super early.

    Check the Illegal early release of super information on our website and contact us on 13 10 20 to report the promoter. The ATO has general information on Accessing your super on our website, and you can find out further information about other schemes the ATO has warned about, at Super Scheme Smart.

    Case study

    John is 45 years old and a member of an APRA-regulated superannuation fund, which his employer makes contributions to and he has a super balance of $60,000.

    John has outstanding bills and he wants to send money to support his family who live overseas however, he can’t afford to do any of this.

    A friend at work tells him he knows a person, Mark who can help access his superannuation for a fee. John is interested so he meets with Mark.

    Mark reassures John that it is okay to access his super and all he has to do is set up a self-managed superannuation fund (SMSF) which he can do for him for a fee of $1,000.

    Mark asks John to sign some blank forms including:

    • roll-over form for his APRA-regulated fund,
    • an SMSF trust deed,
    • trustee declaration,
    • application to open an SMSF bank account,
    • investment strategy, and
    • an election to become a regulated SMSF with the ATO.

    John also provides copies of his license and some other personal identification to Mark.

    Mark sets up a SMSF for John and rolls over the $60,000 from his APRA regulated super fund.

    John then starts drawing money out his SMSF bank account to pay bills, including the $1,000 to Mark for his services and to send money overseas to his family to help them out.

    Since John was not eligible to access his super early the $60,000 that he withdrew from his SMSF is treated as assessable income by the ATO and John is taxed at his marginal tax rate. The ATO also apply an administrative tax shortfall penalty at 75% for intentional disregard of the law of approximately $15,000. They also disqualify John from being a trustee of his SMSF.

    If you have information about a scheme or would like to make a voluntary disclosure, phone 13 10 20.

    Last modified: 25 Jun 2018QC 56090