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Illegal early access of super

Any amount that is illegally accessed early from a Self Managed Super Fund must be declared as income in the member’s individual tax return. The amount should be declared as ‘other income’ and will be assessed at the marginal tax rate plus the Medicare levy. Failure to declare early accessed super may result in interest charges and other penalties.

Any fees or costs retained from a promoter or their agent for facilitating the early access of funds cannot be claimed as a deduction.

Trustees must be aware that if they are knowingly involved in a scheme, or allow the illegal release of funds, the Australian Taxation Office (ATO) may impose severe penalties, fines and possible jail time. The fund may also be made
non-complying.

There are however, some very limited circumstances where the early release of super is not illegal. Members can legally access their super savings in the following instances:

  • Compassionate grounds
  • Severe financial hardship
  • Temporary or permanent incapacity

In order to legally access super savings early an application must be made to the ATO and each case will be assessed individually.

The ATO has advised all tax agents to voluntarily disclose or encourage their clients to disclose any information regarding the early release of funds if they have not already done so.

For more information contact one of our consultants

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