The Australian Taxation Office has warned that self-managed superannuation funds will be a major target for compliance action in the coming year, following the recent deadline for tax return lodgments.
The tax office has identified outstanding issues with over 93,000 funds, prompting increased surveillance alongside intensified efforts by the Australian Securities and Investments Commission to monitor financial advisers recommending DIY structures.
Deputy Tax Commissioner Ben Kelly highlighted several key risk areas, including illegal early access to superannuation, a surge in prohibited loans to members, and coercive control within funds.
"For the 2022-23 financial year, we estimated that $252 million was accessed early from SMSFs without a condition of release being met," Kelly said.
Furthermore, loans from SMSFs to members soared from $231 million in 2022 to $398 million in 2023, despite strict prohibitions that can lead to heavy penalties for trustees.
Kelly emphasised that timely lodgment is crucial, noting, "In our experience, timely lodgment is generally a marker of a fund operating within tax and regulatory guardrails."
The ATO is also investigating coercive control, where dominant members pressure others into illegal actions, such as signing blank forms.
Funds with balances under $200,000 are particularly vulnerable, with Kelly stating, "We also know that SMSFs with balances below $200,000 are the most likely to engage in illegal early access, with just over 80 per cent of all cases coming from this group."
The regulator warned it would wind up funds where trustees are unaware of their obligations.