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Mihir dhanesha

Feb 01, 2024

Early Release Payment: Compassionate Grounds

in SMSF Technical Forum

We have a client who was approved for compassionate early release payments for around $18,000. The request was made by Melissa but she has no balance in the SMSF and has minimal super in another super fund. Daniel, the other member, has a balance of over $100,000.

Their accountant told them that either member could access the money so they applied for the release in Melissa's name. So current scenario is: The amount has been withdrawn, application was in the name of Melissa and Melissa does not have member balance while David does have the balance in his account.

My question is what can we do about this? The members do not have enough money to pay it back any time soon. I am also not sure how it can be rectified because if lodge a contravention report, the ATO will follow it up in future years as well.

1 comment

Comments (1)

THE AUDITORS INSTITUTE

Feb 01, 2024

Hi Mihir

My view is there is not a lot that you can do. I assume Daniel has no ability to access benefits. As a result benefits have been paid out of a member's account when there was no ability to do so. You need to qualify your audit report re the breach and lodge an auditor contravention report (ACR) as I assume the breach will be greater than 5% of the value of the Fund's assets.

There has been a breach of SIS Regulation 5.08 as minimum benefits have not been maintained.

Thanks

The Auditors Institute