Coronavirus: ATO has the ‘super fakers’ in its sights

The tax office is targeting more than 1900 applicants for the early release of super scheme on suspicion they deliberately misrepresented their financial situations.

A spokeswoman for Superannuation Minister Jane Hume said the early release scheme has ‘proven to be a lifeline for millions of Australian families doing it tough during the pandemic’. Picture: Daniel Pockett

The tax office is targeting more than 1900 applicants who used the early release super scheme last year, amid suspicions that they deliberately misrepresented their financial situations in order to gain access to their ­retirement savings.

No penalties have yet been imposed, and there have been another 1700 applicants who have volunteered that they may not have met the requirements.

The Australian Taxation Office estimates 2 to 4 per cent of applicants may have been ineligible for the COVID-19 early-­release program, which began in April and by late December had led to nearly $36bn being pulled from superannuation accounts, according to APRA data.

There were 2.9 million unique applicants for the scheme as at early November, according to ATO numbers, suggesting as many as 116,000 may eventually prove to have been ineligible.

Most cases of ineligible applications related to “genuine errors or misunderstanding of eligibility rather than attempts to breach the rules”, the ATO said.

A compliance rate of between 96 and 98 per cent would compare favourably to the 93 per cent compliance rate for the broader tax system.

A spokeswoman for Superannuation Minister Jane Hume said the COVID-19 early release super program “was an urgent measure that used existing systems to quickly deliver money to people when they needed it most”.

“The overwhelming majority of Australians are honest, and at the end of the day this is their own money,” the spokeswoman said.

The 1900 cases currently targeted by the ATO, however, involved more serious cases where the tax office had reason to believe the applicants may have ­applied to gain access to their superannuation knowing they didn’t meet the criteria.

With speed-to-payment considered a priority in designing the policy, applicants were not required to include evidence to support their claim.

Those who were unemployed or receiving welfare benefits were eligible for the scheme, which allowed Australians to twice withdraw up to $10,000 from their retirement savings.

Anyone who had been made redundant since January 2020 was also eligible, as were workers who had suffered a fall in hours of at least 20 per cent, or sole traders who had experienced a drop in revenue of a similar scale.

To gauge noncompliance with eligibility rules, the ATO is cross-referencing applicants against single-touch payroll data, including redundancy payouts, as well as figures from Services Australia and JobKeeper.

Opposition assistant Treasury spokesman Stephen Jones said the early release scheme was “bad policy and poorly implemented with a long-term cost”.

Those who had inappropriately applied now faced “hefty” tax bills and could potentially be liable for fines, Mr Jones said.

“When you peel back all of the spin and rhetoric, this was privatised stimulus and social welfare on a grand scale,” he said.