Aussie Tax Office to Audit Early Access to Superannuation as Withdrawals Expected to Hit $42 Billion

Federal Treasurer Josh Frydenberg during a press conference in the Mural Hall at Parliament House on June 11, 2020 in Canberra, Australia Sam Mooy/Getty Images

The Australian Taxation Office (ATO) has confirmed that it has commenced a ‘pilot’ program to audit the applicant eligibility for the government’s COVID-19 superannuation early release scheme, with a broader compliance program under consideration.

The move came amidst the Treasury’s latest estimation that the paid-out total could hit $41.9 billion as the government has extended the scheme until December 31.

Speaking to a Senate Select Committee into the government’s COVID-19 response on July 30, ATO second commissioner Jeremy Hirschhorn said the agency had started a new inquiry into some cases involving ineligible applicants for the early release scheme.

“We have information from other sources, for example, single touch payroll data, which suggests that people did not meet the criteria,” he said.

“We’re starting now to do some sort of a pilot in terms of contacting people where it looks like they did not meet the criteria, asking about their circumstances,” he added.

Hirschhorn also said that this would help “work out the level of ineligibility generally” and “shape a broader compliance program.”

Hirschhorn conceded that ATO did not check eligibility on receiving the application, explaining that “this is about getting emergency money to people” and the agency “works on the assumption Australians are honest.”

However, people confirmed to be ineligible will face significant consequences, including paying income tax on the withdrawn amount, and being fined up to $12,600 (US$9,104). Yet penalties are unlikely if it was an honest error and they voluntarily disclose the mistake.

The latest data from the Australian Prudential Regulation Authority (APRA) shows that as of July 19, $28 billion has already been withdrawn from the scheme, with 3.9 million applications (including 1 million repeat applications) lodged.

Treasurer Josh Frydenberg announced on July 23 the extension of the scheme by three months to help those who may still be financially impacted by the pandemic.

“While superannuation helps people save for retirement, the government recognises that for those significantly financially affected by the coronavirus, accessing some of their superannuation today may outweigh the benefits of maintaining those savings until retirement,” said the statement.

In response to the concerns that the early withdrawal may lead to hardship down the track, Prime Minister Scott Morrison dismissed them, saying people should be allowed to do whatever they think best with “their money.”

“It’s not the government’s money. It’s their money,” he told reporters at a press conference on July 30. “The intent for which it is used is decided by the person whose money it is.”

Morrison said that “we are not a government that tells people how they should spend their own money,” adding that “there are legitimate and appropriate rules to enable people in this time of hardship to access their own money to do with it what they believe is best for them.”

“I will back them as to how they spend their money every day of the week,” Morrison said.