Keeping to super's sole purpose


The most fundamental superannuation rule is that super is for the sole purpose of providing retirement and member death benefits - not to subsidise .....

 ..... pre-retirement lifestyles or other personal pre-retirement expenses.



When Matt Bambrick, assistant commissioner for SMSFs with the ATO, gave a broad-ranging speech this month to an SMSF conference*, he included a look at an "emerging" issue and a long-standing issue for self-managed funds. Both involve what is termed in superannuation law as the sole-purpose test.

In the emerging category, Bambrick discussed the promotion of "questionable" overseas seminars for SMSF trustees. He says the promotions claim trustees can gain tax deductions for the full cost of travel, accommodation and meals. The seminars appeared to contain minimal training relating to SMSFs.

Without delving into the possible tax implications of claiming deductions for the overseas seminars, the assistant commissioner says SMSF trustees should be aware of the "potential to contravene the sole purpose test".

Later in his speech, Bambrick focused on the seemingly relentless schemes to persuade super fund members to illegally gain early access to their super savings. Illegal early access to super contravenes the sole-purpose test and other critical provisions in superannuation law.

As a general condition, super fund members cannot gain access to their preserved super benefits until retiring after reaching their preservation age of at least 55 or turning 65. See the ATO’s publications regarding accessing your super.

Certainly, there are limited and strictly administered provisions allowing access to super before members reach their preservation age. These include cases of severe financial hardship as well as on compassionate and medical grounds. And members over 55 can receive a transition-to-retirement pension from their super while still in the workforce.

A key point for super fund members to keep in mind is that the use of retirement savings to subsidise their pre-retirement lifestyles means the money is no longer be available to help finance their eventual retirement. That’s straightforward commonsense.

* The Masters SMSF Conference and Expo 2014 held by CPA Australia.


By Robin Bowerman
Smart Investing
Principal & Head of Retail, Vanguard Investments Australia
31st July 2014



Any advice contained in this website is of a general nature only and does not take into account your circumstances or needs. You must decide if this information is suitable to your personal situation or seek advice.

Rolanda has been my financial adviser for 20 years. I have always found her to be highly intelligent, knowledgeable and professional in her career. Rolanda is accessible at all times and patiently explains terms that I do not fully understand. I can highly recommend Rolanda and it is a pleasure to do so. I do this with the utmost confidence. Marcia Montgomery (Retiree – home duties and ex-clerk with Water Board)
I retired Oct 2012, and seeking Financial Advice for my retirement funds, I decided to have Rolanda look after my financial affairs, and so happy I did. Since my retirement I am extremely comfortable with Rolanda’s advice, experience and strategies and the returns on my investments. Rolanda is my "Breath of Fresh Air" at this stage of my life and she makes herself available 24/7 should you need to talk with her. Steve Hoad (Ground Engineer, Qantas)
In 1997 I left Energy Australia and decided to join Rolanda Adams Financial Services for the financial support and advice that I would need into the future. That decision has proved a very good one and I am still with Rolanda who has given me advice and friendship over those many years. The advice given has ensured that my investments have been protected and the major losses, of some, during the GFC was not felt by me unduly. Rolanda and her team are very easy to contact at any time and one is always received in a most professional manner. I would be most happy to recommend Rolanda Adams Financial Services to all who need financial services. Graham Fleeton (Manager, Property Insurance Group Energy Australia (Ausgrid))
Rolanda has been my Adviser for the past 18 years. Through her wide industry experience and professional expertise she has ensured the sound development and ongoing management of my investments. Her advice has invariably been sound, timely and entirely tuned to meet my personal needs in retirement. She has a friendly, engaging manner and is always readily available to address any of my concerns. I have no hesitation in recommending her. Neil O'Keeffe (Chief Inspector (retired), Australian Customs Service)

© 2021 Rolanda Adams Financial Services Pty Ltd. All rights reserved. Site by PlannerWeb.