“This is a high priority for us to ensure that individuals aren’t setting up funds for the wrong reasons and rolling over their super from an APRA-regulated fund and then illegally accessing it early,” Ms Grant said, speaking at the Tax Institute National Superannuation Conference. 

“One of our key compliance strategies remains targeting individuals and promoters who are registering SMSFs with the sole intent of using that fund as vehicle to illegally access their benefits without meeting a condition of release.”

During the 2020 financial year, Ms Grant said the ATO registered around 22,018 new SMSFs, which was a 7 per cent increase compared with the same time during the 2019 year.

“Registrations overall increased for the first time in five years and there was actually a particular spike in registrations during March at the onset of COVID where they increased by 35 per cent,” she said. 

Ms Grant explained that when an individual registers for a new SMSF or looks to join an existing SMSF, the ATO puts them through its “secure front door” process.

“This involves putting them through our risk model, which uses a series of risk attributes to try and identify individuals who may be potentially trying to enter the system for the wrong reasons,” she said.

Of the 22,018 SMSFs registered in the 2020 financial year, approximately 19.9 per cent or 4,393 of those funds were moved offline and reviewed because the ATO’s model actually rated those individuals looking to set them up as being individuals that were likely to early release their money, she stated.

“As a result of these reviews, 288 funds had their details withheld from Super Fund Lookup, which means they were unable to receive SG contributions or APRA fund rollovers, and we also cancelled 963 newly registered SMSFs,” she said. 

“Almost 46 per cent of the cases picked up by our risk models had further action taken, and because of that, we were able to actually protect $126 million worth of retirement savings leaving the retirement system illegally.”