Australian Taxation Office rejects tens of thousands of applications to access superannuation early
Tens of thousands of struggling Australians who have rushed to access their superannuation early have had their applications scrapped by the Australian Taxation Office.
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Exclusive: Tens of thousands of Australians have had their applications to withdraw their superannuation early rejected, new data has revealed.
Figures from the Australian Taxation Office shows since the early access to super scheme opened up in April this year about 66,400 applications have been rejected, collectively worth $420.7 million.
The scheme has allowed eligible Australians who have suffered income hits during the pandemic to withdraw up to $20,000 tax-free from their retirement savings.
Latest figures show about 2.89 million people have had their applications approved and they have withdrawn $35.9 billion.
The scheme has come under intense criticism from the Federal Opposition and super funds for allowing Australians to dip into their retirement savings prematurely, with claims there was not enough scrutiny on those withdrawing money.
It requires people to self assess their ability to withdraw money when they apply through myGov.
The application is then sent to the fund to release the money.
The Minister for Superannuation, Financial Services and Financial Technology senator Jane Hume said the scheme had been able to help many Australians who were struggling financially during the pandemic.
“The early release of super scheme has been very well received by Australians financially impacted by COVID-19 and it is clear that, despite Labor and Industry Super Australia’s criticisms, the compliance and due diligence measures have been very effective,” she said.
Shadow assistant treasurer Stephen Jones said the figures showed less than 2.5 per cent of applications were rejected.
“The Government cannot therefore claim this $38 billion scheme is being tightly administered,” he said.
“Labor calls on Assistant Minister Hume to release any figures she has in relation to the use by criminals of this scheme to defraud super members of their savings.”
ISA chief executive officer Bernie Dean said he was “pleased” the scheme was ending soon.
“The minister has listened to the community and is no longer asking Australians to sacrifice their retirement to prop themselves or the economy up now,” he said.
Eligible Australians can still access up to $10,000 through until December 31.
Data from the Australian Bureau of Statistics shows that of those who accessed their superannuation early about 57 per cent did so to pay household bills.
Another 36 per cent who accessed the cash either added to their savings or were yet to use the money.
To date no penalties have been laid against people incorrectly withdrawing their retirement savings.
In the Federal Budget earlier this month the Federal Treasurer Josh Frydenberg revealed a raft of changes to the $3 trillion super industry.
This includes no longer leaving members with multiple accounts, putting an end to fee gouging and badly-performing funds will be punished under a raft of new measures.
Latest figures show Australians are paying about $450 million a year in unnecessary fees because they have about 6 million duplicate super accounts.
By 2034 it is estimated Australians could be paying $45 billion in superannuation fees.
Originally published as Australian Taxation Office rejects tens of thousands of applications to access superannuation early