Financial burden of COVID sees rise in illegal loans to members

With COVID continuing to place financial stress on businesses and individuals, there has been an uptick in SMSF members illegally accessing money from their funds, an SMSF auditor warns.

 

Speaking to SMSF Adviser, ASF Audits head of education Shelley Banton said she has been coming across a lot of loans to members in breach of the payment standards, which is a breach of regulation 6.17 of the SISR.

Ms Banton said while a lot of SMSF members took amounts out of super under the COVID-19 early release of super program, which was implemented to support people adversely financially impacted by COVID-19, some have gone beyond this.

“They’ve gone beyond that and they’re helping themselves to super and they’re not repaying it,” she stated.

“Some [SMSF members] have taken money out before they had their determination from the ATO, and some of them had actually taken money out before COVID and had actually put a repayment plan in place to put the money back but stopped that when COVID started.”

In most cases, Ms Banton said trustees are only wiping the cash from their bank accounts as opposed to selling down assets such as property and listed shares.

“We’re just seeing a raid on the bank accounts, not so much assets being sold down to provide that cash, but it’s definitely an ongoing issue,” she said.

“People are still in financial dire straits as a result of COVID and we’re seeing that play out through what’s happening in the super funds so that’s just going to be ongoing.”

With COVID continuing to financially impact a lot of people, Ms Banton said she expects this to continue to be an issue beyond the funds being audited now.

“This will continue to play out throughout 2022. Let’s hope it doesn’t continue in 2023,” she said.

 

 

Miranda Brownlee

07 January 2022

smsfadviser.com

 

 

 

More Articles

Most Spoken Languages in the World

Check out the Most Spoken Languages in the...

Read full article

SMSF assets reach record levels amid share market rally

How SMSF trustees are investing their retirement savings. . Over 1.1 million Australians are now...

Read full article

Income-free areas set to increase from 1 July

People nearing retirement often want to know how much they can earn before it affects their pension, and now...

Read full article

Many Australians have a fear of running out

Longevity risk is a growing concern for many working Australians as well as retirees. . The fear of...

Read full article

LRBA interest rates increase for 2025

The safe harbour interest rate for related party limited recourse borrowing has changed for...

Read full article

How to get into the retirement comfort zone

A third of Australians retire without a plan. Here's why you should have one. . Working and generating a...

Read full article

Compliance focus impacts wind-ups

The ATO’s strategic increased focus on compliance is having a noticeable effect on the sector and is now the...

Read full article

NALE bill passed by parliament

The bill that will introduce changes to the non-arm’s-length expenditure (NALE) provisions has passed...

Read full article

Sofie Korac is an Authorised Representative (No. 400164) of Prudentia Financial Planning Pty Ltd, AFSL 544118 and a member of the Association of Financial Advisers.

Financial Advice Sydney and the North Shore Office based in Gordon NSW

Financial Services Guide - Disclaimer & Privacy Policy

^