In difficult times, some people might think of accessing their superannuation early. However, it’s important to understand that this is illegal and can have serious outcomes. Promoters have approached members and these promoter claims to help them withdraw their super or use a self-managed super fund (SMSF) to pay off debts, buy a car, or pay for a holiday. This is not true, and the ATO has developed a fact sheet “Accessing Your Super Early May Be Illegal,” to help you know the warning signs.

The ATO requests super funds to remind members that super is used for retirement. To access your super early, you have to meet very strict terms and conditions. If you access your super outside of these strict conditions, it is illegal and can result in significant consequences, including additional tax, penalties, and interest. It can also have a significant impact on your retirement savings and disqualify you from ever being an SMSF trustee again. If trustees are disqualified, their names are published, which can affect their personal and professional reputations.

It’s also important to note that if a promoter gets a member to provide them with enough personal information, they may steal their identity and use it to access their super for themselves.

When You Can Access Your Super Early?

For most people to access super early, they need to meet the following conditions:

  • you turn 60 and retire
  • you turn 65 (irrespective of whether you are working).

Otherwise, it will be considered illegal.

Be Aware If You Get An Offer for Accessing Your Super Early

You may get an offer from someone that they can set up an SMSF for you so you can access your super early to pay off your credit card, go on a holiday or buy a house. It is illegal. These people will:

  • charge you a lot of money
  • ask you to transfer some or all your super to the SMSF from your existing super fund
  • ask you to use as much as you need for personal purposes.

Identity Theft

These promoters may ask for your personal details. If you provide them with your personal information, they could steal your identity. In case, a promoter gets in touch with you, you need to call the ATO. Don’t agree to anything and avoid signing any documents or don’t give them your personal details. Avoid accessing your super before you retire unless you meet one of the conditions mentioned above that will make it legal to access your super and get approval.

How Much Super to Pay?

As an employer, you need to pay your eligible employees a super guarantee at least 4 times a year. The minimum SG rate is 11% of their ordinary time earnings that they need to pay for each eligible employee. This is scheduled to increase to 12% on 1 July 2025. If you fail to pay the required SG amount by the quarterly due date, you need to pay the super guarantee charge. You can use the super guarantee contributions calculator. Make sure to check if you need to pay super before calculating how much SG to pay. For more information, you can seek help from a tax agent in Melbourne.

The current Super Guarantee (SG) percentage is the minimum required by law. However, you have the option to pay SG at a higher rate under an award or agreement. To manually calculate the amount of super you need to pay for a quarter, you can multiply your employee’s Ordinary Time Earnings (OTE), which is based on the salary and wages paid in the quarter (before tax), by the SG rate.

It’s important to note that the SG rate applied should be based on when you pay your eligible workers, not when they earned their income. If you’re paying super at a higher rate than the minimum requirement, then use that rate instead. For employees who started working during the quarter, you must calculate their super based on any salary and wages paid in that quarter. Moreover, you can look for a tax return accountant to lodge your tax returns on time.

Conclusion

It can be concluded that accessing super early is illegal and you may have to pay penalties or additional taxes. You can also receive support from Reliable Melbourne Accountants if you find it difficult to understand super-related matters.