Marge and Dave are a couple in their early fifties. They wish to retire early and buy a small hobby farm growing olives in Pomonal, Victoria. The farm is approximately 20 hectares in size. They plan to cultivate olives to produce olive oil for nearby restaurants, but it will be more of a hobby to keep them active in retirement than a serious profit-making venture. The farm itself is valued at $2,000,000, and they plan to lease equipment (olive press, bottling equipment, etc.) worth a further $500,000. They have $1,000,000 in their joint savings account, and assorted shares in a self-managed fund worth $500,000. They have three adult children, and a pet rabbit called Harvey.

They would like to purchase their farm by drawing down $1,000,000 from Dave's superannuation fund. (His fund currently totals $2,542,000.) They approach John Smith who runs his own self-managed superannuation fund. He tells them that if they roll their funds into his super fund then he can make a lump sum payment to enable them to buy their farm, minus administration fees and tax payable to the ATO. He says that by rolling over the funds they will avoid the rules relating to early release of super funds. Alternatively, he advises them to set up their own self-managed fund and then deposit Dave's super funds into the new fund and make their own withdrawals. Finally, he says they could always argue that they were justified to obtain early release due to substantial hardship.

1. Post to the discussion and advise Marge and Daveabout the legality of John Smith's advice.