Ms Steed said it is often a case of people identifying the excess when preparing their annual accounts, hearing the law has changed, and then making a withdrawal straight away without the ATO’s release authority.

“I think it’s going to be a bit more time before it becomes bedded down, before people have the knowledge that you can’t just refund excess contributions,” she said.

“[SMSF trustees] have to go through the proper process of having the ATO identify they have an excess, [the ATO] sending the trustees and the members the relevant release authorities and members actually acting on those release authorities in accordance with the rules.”

If trustees simply refund the money without waiting for the release authority then that would “technically be illegal early access”, Ms Steed warned.

“So in exactly the same way as if I take money out of the superannuation fund without having met a condition of release, just to pay for anything, this would be in exactly the same boat.”

The second problem Ms Steed said she is seeing among trustees is where they do not understand that there are tight timeframes involved in the process of arranging the release.

“We’re seeing instances where members see quite an official letter from the tax office, and they put that in the 'too hard' basket until they get around to contacting their adviser. So by the time they do that, the timeframe for making their elections has then passed,” she said.

“What they [also] fail to understand is that if they don’t go through the release process, then they may still have an excess contribution, which is then taxed at 47 per cent.”

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