ATO toughens stance on hardship super payments – Sydney Morning Herald

Under the scheme, those who have had their income reduced by at least 20 per cent have until September 24 to access up to $10,000 from their super.
That is in addition to the first phase of the scheme, when up to $10,000 was accessible until June 30, 2020. No more than $20,000 can be accessed in total.
The ATO collects real-time data on how much workers are paid, with employers required to report income to the ATO each time an employee is paid under the Single Touch Payroll system.
The STP reports include information such as salaries and wages, pay-as-you-go tax withholding and superannuation.
The ATO can also gather other information from an applicant’s super fund or from government departments.
Applicants for early-release super do not need to attach evidence of financial hardship to support their claims.
However, they need to be able to show evidence of eligibility on request, such as communications, including rosters, with employers as well as bank statements.
Superannuation withdraws under the scheme are tax free but, if an applicant is found to be ineligible, the cash will also be treated as assessable income on which tax will have to be paid.
“Compliance remains one of our key priorities to ensure the integrity of the tax and super systems,” the ATO said in comments released to coincide with the start of the early access second round.
The ATO is also investigating cases in which super has been withdrawn because of financial hardship declarations, only to be returned to an applicant’s super account in the form of a personal contribution for the purpose of gaining a tax advantage.
The advantage results from claiming, in their annual tax return, a tax deduction on the money that is re-contributed to super, so that their taxable income is reduced.
If the ATO finds the early withdrawal was to obtain tax benefit, it will cancel the benefit and impose interest charges as well as a financial penalty.
Industry Super Australia, a lobby group representing industry super funds, estimates 395,000 people under age 35 have emptied their super accounts and that about 480,000 across all age groups could have wiped out their super under the scheme so far.
More than two million people have withdrawn at least $18 billion under the scheme so far.
Industry Super Australia chair Greg Combet says many of those who have withdrawn super early are going to find it hard to catch up.Credit:Louie Douvis
Experts say the total amount could exceed Treasury’s estimate of $27 billion in withdrawals by the time the scheme ends on September 24, with demand likely to increase due to the expiry of government JobKeeper and JobSeeker payments.
Greg Combet, chair of Industry Super Australia, said he is broadly supportive of the scheme in that it helps those in genuine financial hardship.
However, he told ABC Radio National: “We are hopeful that with this second round of withdrawals… the ATO will have a careful look at the eligibility of those applying and match it with other ATO data.”
Combet said hardship withdrawals can have a big impact on super savings over the long term, particularly for lower-income earners, and it would be tough for many of those withdrawing their super early now to make up for the lost retirement savings.
The ATO says it has stopped applications and prevented super money from being released. It is also checking the circumstances of applicants after their applications have been processed to ensure the program’s integrity.
Applicants who provide false or misleading statements to the ATO can leave themselves open to financial penalties.
Applications for early release are not made to individual super funds, but to the ATO via a myGov account linked to the ATO.

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