Big problem looms for 40% of Aussies who accessed super early

A staggering four in 10 Australians who withdrew retirement savings recently haven’t actually lost any income. And it could cost them.

New research has revealed 40 per cent of Australians who withdrew superannuation from July 1 were potentially ineligible, leaving themselves exposed to an expensive ATO fine.

Under the Super Early Release Scheme, which was introduced to help Aussies through the coronavirus crisis, eligible Australians were able to take $10,000 from their super last financial year and a further $10,000 this financial year.

But to meet the criteria, a citizen or permanent resident of Australia and New Zealand must need the cash as a direct result of the economic impact of COVID-19, and must be either unemployed, receiving government benefits such as JobSeeker, have been made redundant as of January 1 or had their work hours cut by at least 20 per cent.

Sole traders are also eligible if their business was suspended or had a drop in turnover of 20 per cent or more.

However, applicants do not have to attach evidence to support their claim, with the Australian Taxation Office simply advising “you should keep records and documents to confirm your eligibility as we may ask you for this information”.

Now, analytics company AlphaBeta and credit bureau illion have crunched the numbers and found 40 per cent of Australians who made a second withdrawal from July 1 didn’t lose any income during the coronavirus pandemic.

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Prime Minister Scott Morrison previously said he didn’t want to ‘give lectures’ to Aussies when it came to their super. Picture: Bianca De Marchi/NCA NewsWire

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The analysis found those people had spent an extra $3618 on average in the fortnight after receiving the cash compared with their normal spending habits.

And 64 per cent was spent on non-essential items such as alcohol and clothing.

The research also revealed an average of $219 was spent on alcohol and tobacco in the fortnight after the second superannuation withdrawal, compared with $157 the first time around. Clothing and department store spending was also up from $296 to $317, as was spending in restaurants and cafes at $287, up from $207.

However, the tax office has since revealed a superannuation rort crackdown, with the rollout of a preliminary examination of eligibility for claims.

It has also confirmed that those found breaking the rules could face separate financial penalties of up to $12,600 on each respective claim.

It means double-dipping account holders who lied about financial stress induced by COVID-19 could be fined a maximum penalty of $25,200, if the ATO deems the applications to be false and misleading.

ATO assistant commissioner Sonia Corsini previously told news.com.au while the “vast majority” of those who had withdrawn super were “honest and doing the right thing”, the tax office would take action when people “deliberately exploit the system”.