ATO Cracks Down on Ineligible Early Release of Super Claims
Industry Super Australia welcomes the ATO announcing it will beef up enforcement efforts against those seeking to exploit the early release to super scheme.
Industry Super Australia has consistently supported this scheme’s policy intent of providing help to members in need but has consistently warned there was a risk people who were not eligible could successfully apply.
Unfortunately, those concerns have been realised with troubling reports of bank data showing money from super was being spent on discretionary items like alcohol, furniture or gambling.
The ATO has also confirmed it has caught people doing the wrong thing.
We welcome the ATO’s renewed focus on compliance and its warning to applicants that it will use all available tools to find dodgy claims.
The ATO has also warned they are on the look-out for those seeking to exploit the scheme to minimise their tax bill at the end of the financial year.
Members should carefully check the requirements before applying for access to their super, if the claim is found to be ineligible, they could be lumped with a far higher tax bill.
Applicants found to have made a deliberately misleading claim could also be slapped with a $12,000 fine.
Members, who have lost their job, or had their income reduced by 20 per cent, can withdraw $10,000 from their super this financial year and another $10,000 from July 1.
But members should think carefully before accessing the scheme as it comes with a hefty price tag at retirement, for those in their 20s it could be as high as six figures.
Treasury had estimated 1.5 million will take out $27 billion from super but already 2 million applicants have accessed the program surpassing government estimates.
Despite the greater numbers Industry Funds were well prepared to deal with the demands of this scheme.
Data from APRA released earlier this week shows ISA member funds have delivered 772,000 members $5.8 billion via the scheme, 96% of it within business five days of the fund receiving details from the ATO.
Comments attributable to Industry Super Australia chief executive Bernie Dean: “Ineligible applicants undermine the credibility of this emergency scheme and could be holding up payments for those that desperately need money now.”
“The Australian Tax Office has a clear warning to those wanting to make a dodgy application – don’t - you will be caught, made to pay more tax and fined.”
“Tapping into super early comes with a hefty price tag and should only be done as a last resort. We will work with the Prime Minister and the Treasurer on how we can regrow balances after this scheme, because we all pay, through higher taxes, for more people retiring with only the aged pension.”