Advertisement
Australia markets closed

  • ALL ORDS

    7,937.50
    -0.40 (-0.01%)
     

  • AUD/USD

    0.6500
    +0.0012 (+0.18%)
     

  • ASX 200

    7,683.00
    -0.50 (-0.01%)
     

  • OIL

    82.74
    -0.62 (-0.74%)
     

  • GOLD

    2,327.80
    -14.30 (-0.61%)
     

  • Bitcoin AUD

    102,153.22
    +364.08 (+0.36%)
     

  • CMC Crypto 200

    1,434.80
    +10.70 (+0.75%)
     

Australians who withdrew super early without having lost work are under investigation ⁠— and might be facing a hefty tax bill

Jack Derwin
·3-min read

With more than $15 billion drained from super accounts in the space of a few short months, the powers that be are beginning to suspect there might be an issue with the scheme.

ADVERTISEMENT

The Australian Taxation Office (ATO) has revealed it will investigate Australians who dipped into their nest egg despite not being eligible.

Culprits will have the amount withdrawn added to their taxable income, likely claiming back around a third of the withdrawn amount for the government empty-looking coffers. In instances where applicants can be seen to have deliberately duped the ATO, fines of more than $12,000 may be issued, leaving them worse off than they began.

"We have seen some COVID-19 early release of super examples where people are doing the wrong thing," the ATO said in a statement.

That's quite an understatement. A Business Insider Australian investigation last month revealed how criminals had engaged in identity fraud to trick the ATO and super funds and steal retirement savings.

It raised serious questions of how the scheme was being run – not least because it revealed that Australians who did not even satisfy the government's own eligibility requirements were being allowed to take out $10,000 per person.

To be permitted to do so, a person must be deemed to be in need of the money. Specifically, they must be unemployed, have recently lost a job, be receiving government support payments, have lost 20% or more of their hours, or have lost 20% or more of their turnover as a sole-trader. One couple told Business Insider Australia that they ticked none of those boxes and yet the ATO greenlit a false application made in their name.

"In some cases, we have stopped applications and prevented super money from being released. In other cases, we review circumstances after an application has been processed to ensure the integrity of the program," the ATO said.

It's unclear why the ATO, which has a clear up-to-date overview of Australian's financial information via mechanisms like Single Touch Payroll (STP), would release funds and review retrospectively.

"Through STP we have real-time information as to whether people are employed and how much they are being paid. Our compliance approach is based on ensuring that people have not exploited the measure. Where we have concerns that claims were not genuine we will review them," it said.

The ATO also receives data from the Department of Social Services and Home Affairs, as well as Australian super funds in addition to holding individuals' income tax returns.

One reason may simply be that the Office has simply been loaded with an unprecedented surge in work. In the space of a few weeks, the federal government announced that the ATO would be in charge of not only signing off on its early access super scheme but also its keystone COVID-19 economic policy, JobKeeper.

The slew of policies has put a significant strain on it along with other government services, with more than 1,500 new customer service staff hired to meet the demand.

However, it was always clear that things were going to slip through the cracks and mistakes would be made. Just last month, Treasury had to come clean and admit its estimated $130 billion JobKeeper program would actually cost $60 billion less after a similar blunder assessing applications.

It may not be the last.

Did your superannuation withdrawal get incorrectly approved? Get in touch jack.derwin@pedestriangroup.com.au | Anonymity available.