ATO catch thousands who plundered funds in super scam

SUPER accounts plundered to fund shopping sprees and property in illegal rort to taxpayers.

Thousands of people have been caught illegally raiding their super funds. Picture: John Donegan

THOUSANDS of people are illegally plundering their superannuation accounts for shopping sprees and property.

In a scam costing taxpayers millions of dollars, cheats are using DIY super funds to get their hands on cash that would otherwise be locked away.

Superannuation is normally inaccessible until the account holder reaches the age of 60.

More than 8000 taxpayers have been detected breaking the rules this financial year, according to the Australian Tax Office.

"We had one who suggested she needed the money to pay off her lay-bys at David Jones," ATO assistant commissioner Stuart Forsyth said.

Others have used self-managed funds to lend money to themselves or buy homes which they rent at a discount.

Mr Forsyth said in most cases money was rolled from an approved major fund into a self-managed fund.

Rather than being invested, the cash was diverted to other purposes in what's called an "illegal early release".

Promoters of the scam often receive a cut of the money in return for their advice.

"The people who facilitate this tend to work within particular ethnic communities," Mr Forsyth said.

"They've already set a fund up, or they will help people set a fund up and they get a fee from the money when it arrives in the bank account."

The rort leaves taxpayers short because of lucrative tax breaks on super contributions.

The average amount involved in the scam is just $20,000, focusing extra scrutiny on people who roll over smaller balances into self-managed funds.

The Tax Office works closely with the major funds and trawls through its own data to identify risky funds movements.

Those involved in the scam risk five years jail and fines of $220,000. But most get little more than a slap on the wrist.

A promoter who received $300,000 in commissions was let off last year with a four-year good behaviour bond and a $1000 fine.

This financial year, 62 people were barred from being trustee of a superannuation fund after being caught out.

"Some people just seem to want the money. The think it's theirs and they can have it now," Mr Forsyth said.