The Government has specifically referenced self-managed superannuation funds (SMSFs) in detailing new legislation aimed at increasing the penalties around early release superannuation schemes.
Announcing the introduction of the Superannuation Legislation Amendment (Reducing Illegal Early Release and Other Measures) Bill 2012 and the Income Tax Rates Amendment (Unlawful Payments from Regulated Superannuation Funds) Bill 2012, the Minister of Financial Services, Bill Shorten, said the higher penalties were designed to deter promoters of illegal schemes.
“Promoters of illegal early release schemes have in the past exploited vulnerable people within our community who may not be fully aware of the rules regarding accessing superannuation benefits,” he said.
“These new penalties will deter promoters from taking advantage of these people and help protect the superannuation savings of all Australians.”
Under the changes, promoters of illegal early release schemes will face civil and criminal penalties including a fine of up to $340,000 (2,000 penalty units) and/or imprisonment of up to five years.
The Minister’s announcement said another important reform introduced by the Government would deter people from accessing their superannuation benefits illegally by taxing these amounts at the rate of 45 per cent.
“For example, if a person accesses $10,000 of their accumulated superannuation savings from their self-managed superannuation fund (SMSF) via an illegal early release scheme to pay their business debts, their tax liability will be $4,500 plus the Medicare levy (1.5 per cent). So total tax payable on the amount accessed would be $4,650.”
The ministerial announcement said a number of other reforms also introduced would increase confidence in, and the integrity of, the superannuation sector, including:
- measures to give the Australian Tax Office effective, flexible and proportionate powers to address wrongdoing and non-compliance by SMSF trustees; and
- capturing roll-overs to SMSFs as a designated service under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) to ensure superannuation benefits are not being used for illicit purposes.
By: Mike Taylor