Legal Tip 79: Don't be Tempted to Dip into your Super Early

Unauthorised Withdrawals of Super

When a person is running their own SMSF it would be very easy and perhaps tempting to ‘borrow’ or release early some money from your super fund. This would be a contravention of various sections of the SIS Act, even if the money is paid back to the fund.

Possible breaches include

• s62 Sole Purpose test - to provide for retirement of its members.

• s65 Lending money to members

• s84 breaching in-house assets rule

• s109 Not dealing at arm’s length

In a recent case Mr and Mrs Ryan were both trustees and the only members of their SMSF. In 2009 they withdrew about $17k from the fund before meeting a condition of release. IN 2010 they withdrew $53k. In 2011 another $70k and in 2012 $70k again.

They made full admissions, cooperated with the ATO and paid back the money borrowed.

The penalty was $20,000 for each of them.

See
DCT (Superannuation) v Ryan [2015] FCA 1037
http://www.austlii.edu.au/au/cases/cth/FCA/2015/1037.html

 

Worse case can be a custodial sentence

 

Personally I think the Ryans got off pretty lightly - must have been a bunch of mitigating circumstances?

 

Hi Mr Bum

If you look at the case judgment towards the end other cases and penalties are reviewed and the penalties all seem to be around the 30k mark. I would have thought this is a rather light penalty myself.