SMSF trustees and members must be vigilant about being the target of promotions for unlawful schemes and arrangements that appear legitimate, according to the ATO.
In a presentation at the recent SMSF Association SMSF Expo in Melbourne, ATO deputy commissioner James O’Halloran said he has seen a small number of these kinds of cases and warned the trustee will not only be accountable but will also suffer the loss if they fall prey to these schemes.
“They have a lot of paperwork, they have a lot of very formal sounding advice, but I think there’s a common trick to them,” O’Halloran said.
“The SMSF environment comes with its limitations and it certainly doesn’t necessarily augur well just because the paperwork looks right.”
The tax office has seen trustees being duped into believing they can roll their future retirement savings out of their Australian Prudential Regulation Authority-regulated fund into an SMSF in order to withdraw it for use as a deposit on a house.
O’Halloran said these arrangements are illegal and trustees risk losing their savings as a result of them.
“I think the rule of thumb is quite simple. If it looks too good, if it looks too advantageous, one should have an alarm bell straightaway and seek advice, whether it be from the ATO, from the adviser, or perhaps from the tax agent,” he said.
He also noted the 2016 federal budget superannuation reforms introduced new concepts, such as transfer balance caps and the total superannuation balance, and warned trustees who exceed them are liable to pay excess tax.
The ATO is in the early stages of issuing excess determinations and excess tax bills, and was monitoring funds closely, he said.
“In fact, since Christmas there has been some 8000 SMSFs who have voluntarily reported their balances to the ATO even though you’re not required to until July because they’ve got some extra visibility out of the account information that we can then verify,” he said.