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ATO targets SMSF fraud

The Australian Taxation Office (ATO) is focusing attention on new SMSFs registrations after identifying illegal release of super.

Speaking at the SMSFA National Conference assistant commissioner Justin Micale said results of its 'secure front door program' showed new registrations increased by 7% in 2020 compared to the previous year.

Of these, around 220 were picked up by risk models which resulted in several of the funds being deemed too high risk and stopped from registering.

"This resulted in an estimated $126 million in retirement savings being stopped from being rolled out of an APRA regulated account and rolled into an SMSF where potentially it could have been illegally accessed," Micale said.

"We know illegal early release can come about as a result of promoters providing blatantly wrong information to potential trustees."

Micale reiterated that the ATO is working with other regulators and federal agencies to identify and take firm action against this type of activity.

In addition, another aspect of the 'secure front door program' is to protect against identity fraud.

"In the SMSF system, identity fraud can involve the use of stolen identities to fraudulently set up a new fund so that it can receive payments and rollovers from genuine APRA or SMSF accounts," Micale explained.

The ATO identified 18 stolen identities being used to establish 12 SMSFs worth around $2 million in super in the first six months of the financial year.

Micale said it is critical for advisers to safeguard client details and alert the ATO of any breaches and thoroughly check the identity of any new clients before establishing an SMSF.

"Finally, pay close attention to ATO issued alerts/notifications advising of changes to the SMSF account," he said.

"If you or your clients are not aware of the reasons for these changes take immediate action and contact us."

Read more: Australian Taxation OfficeJustin MicaleSMSFA National Conference
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