Superannuation - it's your money...but not yet

August 2019

This catch cry can sometimes be forgotten, particularly for SMSF members who have easy access to their superannuation fund bank account.

When finances are stretched due to business downturns or relationship breakdown, sometimes the cash balance of your SMSF can seem like an easy answer, but there are significant consequences for accessing superannuation before you are legally permitted to, such as:

  • You may be required to pay interest and significant penalties on any illegal withdrawals.
  • Illegally accessed super may be taxed at 45% regardless of your marginal tax rate, even if you return the super to the fund later.
  • If you, as a Trustee, knowingly allow illegal access to super, you may incur a fine of up to $420,000 and a jail term of up to five years or fines up to $1.1 million for Corporate Trustees.
  • SMSF Trustees can be disqualified from being trustees for allowing super to be withdrawn early from the fund.

The bottom line is that while SMSF cash may appear to be an easy answer to a cashflow problem, the potential consequences are really not worth it. We highly recommend speaking to your financial advisor to find an alternative solution before considering this drastic measure.

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Topics: Superannuation

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