In the event that you have accessed any amount from a Self Managed Super Fund before you are eligible, you must declare it as income in your personal individual tax return. This money has to be declared as ‘other income’ and it will be assessed at marginal tax rate plus Medicare levy. Failure to declare early accessed super may result in interest charges and other penalties.
In addition, any fees or costs retained from a promoter or their agent for facilitating the early access of funds cannot be claimed as a tax deduction.
It is important for Trustees to understand and be aware that if they are involved in any such scheme consciously or have allowed unlawful release of funds, the ATO may impose severe penalties and fines.This offence may lead to possible jail time. The fund may also be made non-complying.
On the other hand there are however, some very limited circumstances where the early release of super is not illegal. Members can access their super savings legally under the following circumstances:
- Compassionate grounds
- Severe financial hardship
- Temporary or permanent incapacity
- Death
You will have to make an application to the ATO when you want to access your super savings legally. Every case is assessed on its own merit.
All tax agents have been advised by the ATO to voluntarily disclose or encourage their clients to disclose any information regarding the early release of funds if they have not already done so.