ATO cracks down on super scheme promoters

TheAustralian Taxation Office (ATO)has acted to crack down on scheme promoters offering to give individuals early access to their superannuation savings.

The ATO has issued a taxpayer alert warning investors to steer clear of the scheme promoters after it became aware of a number of promoters arranging early access to superannuation savings in a way it considered illegal.

It is understood the tax office has a number of promoters under investigation as a result of the schemes, most of which appear to have targeting people across wide parts of Queensland.

The schemes required individuals to roll their superannuation savings into a self-managed super fund. The money was then invested offshore and loaned back to individuals, who paid substantial application and management fees to promoters.

Individuals were required to pay interest on the loaned money only until they reached retirement age when the loans had to be repaid in full.

The tax office says most people were lured into the schemes through weekend newspaper classified advertisements and through the Internet.

“The Tax Office believes these arrangements are an attempt to get around laws that preserve and encourage superannuation savings,” the tax commissioner Michael Carmody says.

“Superannuation is taxed at lower rates to encourage retirement savings. People who obtain unapproved access to their super risk losing these concessional tax rates. They also risk prosecution.”

Carmody says individuals face penalties of up to five year’s imprisonment or fines of up to $220,000 for getting involved in the schemes.

People also risk losing their retirement nest-egg if the offshore investment arrangements collapse, Carmody says.