Powered by MOMENTUM MEDIA
realestatebusiness logo

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

“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 brokerage has teamed with the fintech, for the launch of a new app that will let borrowers compare pricing and environmental impact acro...

The desire to secure a mortgage has collapsed across the country, according to a new analysis from Equifax. ...

The Reserve Bank will be closely watching how households respond to higher rates as it decides its next move, ANZ senior economists have sai...

VIEW ALL

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

What is the maximum proportion of income borrowers should use to service a mortgage?

Website Notifications

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