The Federal Government has passed a new law to impose tougher penalties on anyone caught promoting schemes which promote an illegal early release of your superannuation.
An early release scheme offers to help you access your superannuation before you’re legally allowed access to it.
It is common for proponents of these schemes to get vulnerable people to roll over their super into a Self Managed Super Fund (SMSF), and to then charge big commissions – sometimes up to 50 per cent – to illegally pay this money back to them.
The law change has closed a loophole which meant that people who offer these schemes could not be penalised if they weren’t themselves a trustee of the fund they were promoting.
Now, anyone peddling these schemes will face civil or criminal penalties of up to five years imprisonment. The new law also imposes penalty provisions, including education orders, for trustees who do the promoting.
The new penalties have support from various industry bodies including the Australian Institute of Superannuation Trustees (AIST).
“This is not rocket science – we support action against promoters of early release schemes,” said Executive Manager for Policy and Research at AIST David Haynes.
In 2011-12, the ATO claimed to have prevented 298 funds from entering the system and removed 427 existing funds where they suspected illegal access was planned.
“This data from the ATO shows that this is not a small problem and we welcome any measures that will promote a better retirement future for all Australians,” said Mr Haynes.
This new law may go some way to protecting vulnerable Australians, and cleaning up the SMSF industry.