Accessing your super illegally without meeting a condition of release will result in significant negative impacts for your SMSF and in your personal capacity. It is not worth doing it.
The adverse consequences for accessing super illegally include:
- Your Fund will be considered as a non-compliant Superannuation Fund
- The tax rate for the Fund will be increased to 45% versus the concessional 15% tax rate
- The amount taken from the SMSF will be included in your personal tax return and taxed at your marginal tax rate
- The audit for your SMSF in the year will be qualified and a contravention report will be submitted to the Tax Office
- The Tax Office might conduct an audit on your Fund
If accessing your Super was an honest mistake, you need to rectify the mistake and pay back the funds as soon as is practical. Please be aware that if the breach is not rectified in a timely manner, the Trustee might be disqualified as a Trustee for the Fund by the Tax Office.
SMSF early engagement and voluntary disclosure
The ATO introduced a service enabling SMSF Trustees and professionals to notify the ATO of unrectified regulatory contraventions. See the steps by following this link.
Usually, when a Fund breaches superannuation legislation, the Tax Office would require the Trustee to undertake training to ensure they understand their obligations and responsibilities. To better understand their obligations, Trustees can do some free training. For guidance on the duties and responsibilities of a Trustee, please see the ATO guidelines explained here .