ATO investigates fraud: early release of super

If you’re one of the 2.4m Australians who has taken advantage of COVID-19 early super release, beware as the ATO is investigating fraud and schemes related to this measure. In announcing the significant investigation, the ATO has also given notice of a data-matching program to acquire data from Services Australia (Centrelink) which is projected to collect information from approximately 3m individuals. The data-matching program is expected to identify those applying for early release when they did not meet the criteria under the COVID-19 early release condition.

Recent APRA figures indicate that around 2.4m Australians have taken advantage of the government’s COVID-19 early super release. To date, over $17bn in payments have been made with the average payment sitting around $7,492 per person. With that figure in mind, the ATO has announced a significant investigation into fraud and schemes designed to take advantage of early release of super.

To recap, in order to be eligible for early release of super under the COVID-19 condition, the payment must be required by Australian and NZ citizens or permanent residents to assist them to deal with the adverse economic effects of COVID-19 and one of the following must apply:

  • you are unemployed;
  • you are eligible to receive either: jobseeker payment, youth allowance for jobseekers, parenting payment, special benefit, or farm household allowance;
  • on or after 1 January 2020 either: you were made redundant, your working hours were reduced by 20% or more, or you were a sole trader and your business was suspended or there was a reduction in turnover of 20% or more (partners in a partnership are not eligible unless the partner satisfies any other of the eligibility).

According to the ATO, it has received intelligence about a number of dodgy schemes, including the withdrawal of money from super and re-contributing it to get a tax deduction. It notes that the COVID-19 early release of super was designed to assist those experiencing hardship and therefore withdrawal and re-contribution schemes are not in the spirit of the measure. As such, any schemes could be subject to severe penalties including financial, prosecution, and imprisonment for the most serious cases.

“We know the overwhelming majority of Australians are honest, and we’ve worked hard to help those people who are impacted by COVID-19 as quickly as possible…We also 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.” – ATO Deputy Commissioner Will Day

To ensure integrity of the tax and super systems, the ATO will be using a large number of data sources it has access to including Single Touch Payroll, income tax returns, information reported by super funds, and data from various third-party sources. In addition, it has also established a confidential tip-off line for the community to report suspected wrong-doing and is said to be taking all referred information seriously.

In conjunction with its own data sources, the ATO has also commenced a data-matching program which will acquire details and confirmation of government payments made to applicants for the period of 19 April 2020 to 24 September 2020 from Services Australia (Centrelink). Data from approximately 3m individuals is expected to be collected.

The data itself will consist of identification details (names, addresses, date of birth), government payment/benefit type (ie JobSeeker, parenting payment etc), date granted, ceased government payment/benefit, and date government payment/benefit ceased. Using the existing data sets and the data collected, the ATO is seeking to identify those applying for early release when there is no change in their regular salary and those making false statements or fraudulent attempts to meet the eligibility criteria.

What to do now?

If you’ve applied for early release of super but now have doubts about your eligibility, we can help. According to the ATO, it’s much better to come forward and make a voluntary disclosure rather than waiting to be audited. So, if you would like to make a voluntary disclosure, we can assist and potentially help you avoid penalties.