Australians warned by ATO to not flout the rules when applying to access their superannuation early
More than a million Australians who have not been impacted by the coronavirus fallout are intending to access early super payments. Here’s what will happen if they are caught out.
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Exclusive: A massive $14 billion in superannuation savings could be withdrawn early by Australians rorting the system just so they can get quick access to cash.
New modelling by Industry Super Australia (ISA) found more than 1 million Australians who had not been impacted by the coronavirus fallout were intending to access super payments they are not entitled to.
This would put pressure on the retirement system down the track because more people would need to rely on government handouts because of their depleted balances.
The revelation drew a stern warning from the Australian Taxation Office on Monday to anyone doing the wrong thing – lie and you will be slapped with hefty penalties.
The ISA polling of 1100 people found about 30 per cent aged under 65 with a super balance planned to take up the scheme, designed to help those in financial hardship because of the pandemic.
To be eligible, the federal government stipulated applicants must have lost their job recently or had significant drops to their income levels.
Those intending to incorrectly access their super told ISA they would withdraw an average of $13,500 each.
From this week Australians in financial hardship amid COVID-19 can access $10,000 of their own super savings before June 30 and another $10,000 next financial year.
But industry sources are concerned many applicants will be dishonest on their submissions which rely on self assessment.
Applicants do not have to provide any documentation proof when going through the four-step online application process.
Some sources told News Corp, “it’s just a simple tick of a box and away you go,” suggesting applicants were using their super funds as ATMs.
ISA chief executive officer Bernie Dean warned those who “flout the rules could face severe penalties”.
“The Australian Taxation Office has assured us there is a robust compliance regime in place,” he said.
“It is tempting to tap into your super early some may want to do so as a savings buffer, but nothing in life is for free and cracking open your nest egg comes at a steep cost – it should be treated as a last resort.”
ISA figures showed a 30-year-old who withdraws $20,000 now would end up $97,000 worse off in retirement.
As of last week more than 881,000 people had registered their interest to access their savings early.
Some had even told funds they would use the money to wipe credit card debts.
The ATO’s deputy commissioner John Ford warned Australians to do the right thing when applying to access their money or face tough consequences.
“The ATO will be reviewing applications and where we have concerns that the claim was not made genuinely penalties may be applied,” he said.
“They range from monetary penalties (to $12,500 where the person has shown intentional disregard) through to prosecution in exceptional circumstances.”
The ATO said those who had applied to access their super, follow up calls were not necessary. Instead their application should be processed within four business days of it being made before being approved and sent on to the relevant fund.
From here it can take up to five business days for the money to be transferred into the applicant’s nominated bank account.
To apply go to myGov and click the link “Government support for coronavirus”.
Originally published as Australians warned by ATO to not flout the rules when applying to access their superannuation early