The Australian Taxation Office (ATO) has issued a warning to those abusing the early access to super scheme ahead of the second offer opening on 1 July.
This is in response to research conducted by illion and consultancy AlphaBeta which showed that 40% of those who made withdrawals were still employed and had not suffered any reduction in working hours 1.
“We have an important role to ensure the integrity of the stimulus measures and when we uncover fraud or people seeking to exploit them, we’ll take action, as we know the community would expect us to do,” said ATO Deputy Commissioner Will Day 2.
The early access scheme was designed to help people experiencing financial hardship, including those who had lost their job, or had a reduction in income of over 20% as a result of the lockdown measures. Those eligible were able to withdraw up to $10,000 of their superannuation tax-free in the 2019/20 financial year (applications for this period are now closed), and the same is also available in the 2020/21 financial year (provided you apply before 24 September 2020). As at 21 June, over $17 billion has been withdrawn by 2.3 million Australians 3.
It seems some applicants have sought to exploit the scheme by withdrawing super while still working. Some have even re-contributed the money back into their super as a salary sacrifice to claim a tax deduction while others have re-arranged their working conditions to claim JobKeeper, early access to super and the tax deduction.
What may not have been considered by those taking these actions is the ATO having quick electronic access to a large number of data sources such as Single Touch Payroll, income tax returns, and information from super funds and third-party sources.
Penalties include having to pay income tax on the payments received and fines of up to $12,000 if you are found to have intentionally provided a false or misleading statement 4.
You can read the ATO’s press release here.
We understand times are tough for many Australians and if you genuinely need assistance you can find out more about Early Access to Super, and try our calculator to find out how withdrawing super today can impact your savings in the future.
1Super bender retirement nest egg withdrawals used to boost spending on non-essentials, Sydney Morning Herald, 1 June 2020
2ATO zeroes in on COVID-19 fraud (Media Release), 23 June 2020
3COVID-19 Early Release Scheme - Issue 9, 29 June 2020
4COVID-19 Early release of super - integrity and compliance, 18 June 2020
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