ATO to crack down on ineligible Australians accessing early superannuation during COVID-19
Australians flocked to access their superannuation during the first wave of COVID-19, but the ATO is now set to bring in harsh measures to hunt down those who flouted the rules.
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Investigations are being made into some Australians incorrectly accessing their super early, with the Australian Taxation Office warning they will catch those cheating the system.
Under the Federal Government’s early access to super scheme rolled out during COVID-19, about 2.8 million individuals have withdrawn about $35.1 billion.
But at the Senate Select Committee on COVID-19 today, the Australian Taxation Office revealed between two and four per cent of applicants who accessed their super early were not eligible.
The ATO’s second commissioner Jeremy Hirschhorn said despite this they were still looking into people doing the wrong thing.
“It appears more than 96 per cent of applicants and maybe closer to 98 per cent are eligible,” he said.
The ATO did a pilot test of 160 early access applicants but contacted only 71 in the end. Of these 63 were eligible and eight were not.
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They then did a second pilot which focused on three high-risk pools of applicants, including tip-offs, employees who looked like they had high employment and also referrals through myGov.
“Across the high-risk employee category about 70 per cent were eligible and only 30 per cent were ineligible and of the myGov referrals pretty much everybody was eligible,” Mr Hirschhorn said.
He said given the high level of people doing the right thing this would ultimately determine whether they dig deeper into the scheme to catch out those flouting the system.
Under the scheme it relies on self-assessment by the individuals, who then lodge their application via myGov.
Those who have suffered a significant income hit or been made redundant could access $10,000 last financial year and another $10,000 through until December 31 this year.
Withdrawals are tax free.
Mr Hirschhorn said about 1200 applicants had withdrawn their money from super and then immediately recontributed it to minimise tax paid.
He said the ATO had “written to them”
“We were unhelped by the fact there was a show, I think on the ABC where they introduced an academic who suggested such a strategy which was unhelpful,” he said.
The early access scheme has come under intense scrutiny during the pandemic.
Treasurer Josh Frydenberg has previously said it was the “people’s money” and Australians should be able to access their money if they are eligible, while the Opposition has criticised the scheme.
Debate continues to rage over whether compulsory superannuation payments which are legislated to increase from 9.5 per cent to 10 per cent next year should proceed, given the huge hit to the economy this year.
Compulsory super is scheduled to rise to 12 per cent by 2025 but the Reserve Bank of Australia governor Dr Philip Lowe said if it did proceed he would “expect wage growth to be even lower than it otherwise would be”.