The ATO advises that it is changing the registration process for self managed superannuation funds (SMSFs) to prevent the illegal early release of superannuation money from the super system. Specifically, it advises as follows
“From January 2010, improvements will be made to the SMSF registration process to identify and prevent sham SMSFs from operating and being displayed on Super Fund Lookup (SFLU). The new registration process means that it will take approximately seven days before an SMSF is shown on SFLU.
To assist transparency in the transfer of super, a new status for SMSFs will be added to SFLU. All new SMSFs, as well as existing SMSFs who have not received a Notice of Compliance, will be given the new ‘registered’ status. SMSFs with the new status will still qualify for concessional tax rates and be permitted to have super transferred into the fund bank account.
Around the same time as these system changes are implemented, the ATO, in association with the Australian Prudential Regulatory Authority (APRA), will be issuing guidance to APRA-regulated funds outlining additional checks that should be undertaken when transferring super to SMSFs. The additional checks are designed to give funds a level of assurance that the requesting fund is legitimate and not an illegal early release or identify theft attempt.
Tax practitioners and their clients wishing to establish an SMSF should note:
- It will take seven days for a new SMSF be assessed by the Tax Office and appear on Super Fund Lookup. A large fund will not process a rollover request by an SMSF while it is not listed on Super Fund Lookup.
- SMSF will still have access to their ABN within current timeframes and as such can use this number to establish a bank account for the fund.
- When processing a rollover request to a SMSF, a large fund may seek additional information from the requesting member to confirm the identity of the member and the legitimacy of the fund. They may request copies of trust deeds, investment strategies and/or bank account establishment documentation. Make sure you have these on hand in order to quickly satisfy their queries and expedite the rollover process.
- Another way to speed up the rollover request process is to ensure the details on the request form exactly match the details on Super Fund Lookup; which is a reflection of the details provided during registration.
These changes are designed to stop illegal early release of superannuation and retain the integrity of the system. With careful planning and consideration, legitimate SMSFs should not experience any adverse impacts to these changes."
More information on illegal early release is available on the ATO website here