A 51 year old man has been sentenced today in the Downing Centre District Court, NSW, to three years’ jail after pleading guilty to orchestrating an illegal early release of a superannuation scheme.
Mr Kent Nguyen was found to have unlawfully created, operated and benefited from a fraudulent self-managed superannuation fund (SMSF) named Tot Form Super Fund. The fund did not comply with the relevant protocol, procedures and requirements of superannuation legislation to make it a legal SMSF.
Between 2007 and 2009, Mr Nguyen used the fund to arrange the unlawful early release of superannuation funds for a number of people in the community. Many of the people were in financial trouble and were approached by friends who told them ‘they knew someone’ who could help.
In each of the 25 cases, the individual’s super balance that was held within a retail superannuation fund was rolled over to Tot Form Super Fund, with the total amount of funds unlawfully withdrawn exceeding $700,000. Mr Nguyen retained a significant portion of this amount telling his clients that the money had been paid to the ATO as tax.
ATO Assistant Commissioner Ian Read said the sentence handed down today demonstrates that promoters who encourage illegal early access to superannuation will be held accountable.
“While the majority of SMSFs do the right thing, this case serves as a reminder that there are severe penalties for those who attempt to cheat the system. Taking your super out from any super fund early without meeting a condition of release, or encouraging others to do so, is illegal.
“This case is also an important reminder for people to be aware of their super affairs, and their obligations. There are some very limited circumstances where you may be able to withdraw your super early, but generally you can only withdraw your super when you reach preservation age and stop working.
“Illegally accessing super early will cost people a lot more than the super they access and may get them into trouble as there are serious consequences for withdrawing super before they are legally entitled to do so. These consequences could include declaring the accessed amount as income in their income tax return, administrative penalties and disqualification from being a trustee.” Mr Read said.
You can find out more about how you can avoid being a victim of illegal early release of super at ato.gov.au/illegalsuperschemes
If you have any information which may indicate tax fraud or evasion, find out how to report it by visiting ato.gov.au/tipoff or call 1800 060 062.