There will always be scammers and rorters, and officials hot on their trail. With another round of the early release of super scheme now open, the Australian Tax Office (ATO) has sprung into action – even as its website crashed under the weight of an estimated 2.4 million new applications.
The ATO says that it has developed a data-matching program to identify anyone deliberately exploiting the super scheme and any COVID-19 relief measures.
The Australian Prudential Regulatory Authority (APRA) reported this week that another $1.2 billion had been pulled from the country’s superannuation pool, taking total withdrawals to $17.1 billion. There have been 2.3 million applications that paid, on average, $7492 per withdrawal.
But with the start of the new financial year, the scheme has effectively reset and fund holders experiencing hardship can apply for a second – or first – amount of up to $10,000 from their super fund until 24 September.
However, given widespread reports that some recipients have used the funds for ‘lifestyle’ purchases, the ATO is stepping in.
It will run a data-matching program to help identify anyone making false or misleading declarations to access any COVID support measures.
The ATO said in a statement that its program would examine JobKeeper payments to employees, sole traders or other individuals and “numerous examples of individuals deliberately misusing the COVID-19 early release of super”.
“In some cases, we have stopped applications and prevented super money from being released,” it said. “In other cases, we review circumstances after an application has been processed to ensure the integrity of the program.”
The ATO said it had uncovered instances of individuals artificially re-arranging their affairs to appear to meet eligibility criteria and, effectively, rorting the system.
It said that superannuation members who withdrew their super early, recontributed the amount back into their fund and claimed a personal super contribution deduction could expect “a range of tax outcomes” including excess contributions tax and contributions tax.
“Schemes under COVID-19 early release of super that attract our attention include artificially arranging your affairs to meet the eligibility criteria, withdrawing and recontributing super to claim a tax deduction and contributing an amount of super to claim a deduction and then withdrawing that amount,” it said.
“Where Part IVA applies to a scheme, the tax benefit obtained may be cancelled. In addition, administrative penalties and interest charges can also apply.
“We understand that these are uncertain times and people’s circumstances change, so it is important that you keep records demonstrating your eligibility in case we need to see them.”
The Financial Rights Legal Centre says it has been deluged with complaints of real estate agents and businesses pressuring people to access their super to pay debts.
“We’ve seen numerous examples of landlords and real estate agents telling people to get their super to pay rent, which is a sad outcome,” said centre policy officer Juiia Davis.
“Suppliers who are angry they’re not getting paid are pressuring small business owners to take out their super.
“We’re even hearing over and over again that Centrelink itself are telling people who are trying to access JobSeeker payments who don’t apply to access their super.”
The Association of Superannuation Funds of Australia (ASFA) has released the following findings about the scheme:
- Australians aged under 35 years have accessed the early super scheme in the greatest numbers compared with other age groups.
- Residents of Queensland, Western Australia and the Northern Territory have applied for early release of superannuation in greater numbers compared to other states.
- 15 per cent of the total number of individuals with a superannuation account and more than 20 per cent of the labour force are expected to receive early release payments from super.
ASFA chief executive Martin Fahy said the erosion of retirement balances through the early release scheme reinforced the need to move as soon as possible to a Superannuation Guarantee rate of 12 per cent “in order to provide adequate retirement savings for individuals, particularly women and younger Australians”.
Do you believe the early release scheme will result in a generation of retirees without sufficient personal income?
If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.