Powered by MOMENTUM MEDIA
subscribe to our newsletter

ATO warns on mortgage payment schemes

The Australian Taxation Office has issued a stern reminder to SMSF trustees about the “severe consequences” for those who attempt to make mortgage payments with their superannuation funds under the guise of financial hardship.

While a release of retirement money on compassionate grounds is possible, the option is only available in very limited circumstances and strict criteria must be met.

Superannuation savings will only be released to make mortgage payments if a person does not have the financial capacity to pay the mortgage, and their mortgagee is threatening to repossess or sell their home.

Taxpayers are only able to withdraw superannuation under severe financial hardship after receiving government income support payments continuously for 26 weeks and if they are unable to meet reasonable and immediate living expenses.

Further, payments from a super fund are limited to a maximum of $10,000 every 12 months.

Advertisement
Advertisement

PROMOTED CONTENT


“If you are voluntarily salary-sacrificing into your super fund, instead of paying your mortgage, you will not qualify for compassionate grounds because you have the financial capacity to make your mortgage repayments by accessing your employment income,” the ATO said.

“Improper early access to your super is illegal – there are severe consequences for you and your fund if you access your super before you are legally entitled to do so. These include disqualification of trustees, the fund being made non-complying, imposition of administrative penalties, and prosecution.

“Any money accessed illegally will also be assessed as income for the individual and taxed at the applicable marginal tax rate.”

ATO warns on mortgage payment schemes
mortgagebusiness

Latest News

The Victorian Government will deliver “an historic” $5.3 billion Big Housing Build to construct more than 12,000 new homes throughout me...

A “more optimal” retirement income system would involve retirees “more effectively” drawing on home equity to fund their standard of...

Non-major lenders continue to be the more highly rated lenders used by brokers for both turnaround times and policy, according to the lates...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: Responsible Lending - what could lie ahead for lenders brokers and borrowers?

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.