Aussies who rorted super early release scheme face $25,000 fines


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Were you among the estimated 2.5 million people to withdraw money from your super due to COVID-19?

In order to speed up payments the tax office did not screen applications - some people who were not eligible have obtained payment. Now the ATO is tracking those people down.

You can still request an early release of your super up to September 30, but you need to meet one of the following criteria to qualify:

25000 fines for early release super

  • You are unemployed.
  • You are eligible for JobSeeker or other benefits.
  • On or after January 1, 2020, either: you were made redundant; your working hours were reduced by 20% or more; or if you were a sole trader your business was suspended or there was a reduction in your turnover of 20% or more.

The ATO is now checking applications. If it identifies you weren't eligible (for instance, by matching payroll information from your employer with your application), it will revoke your permission to withdraw.

You won't need to repay it - in fact, the ATO won't let you - but you will be taxed on the amount. You'll need to include the amount in your tax return and pay tax on it at your marginal rate.

Guidance issued by the ATO suggests it will pursue everyone who withdrew money without being eligible.

As well as taxing the withdrawals, it will also apply penalties where someone has made a false or misleading statement to access their super.

People who have applied for early release without meeting the necessary requirements could face fines of up to $12,600 for each application. The maximum penalty for making two ineligible withdrawals is $25,200.

About one million Australians accessed their super under both rounds of early release.

The ATO has so far contacted about 5000 people who accessed their super before June 30 and warned them to review their eligibility before applying for the second round.

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Mark Chapman is director of tax communications at H&R Block, Australia's largest firm of tax accountants, and is a regular contributor to Money. Mark is a Chartered Accountant, CPA and Chartered Tax Adviser and holds a Masters of Tax Law from the University of New South Wales. Previously, he was a tax adviser for over 20 years, specialising in individual and small business tax, in both the UK and Australia. As well as operating his own private practice, Mark spent seven years as a Senior Director with the Australian Taxation Office. He is the author of Life and Taxes: A Look at Life Through Tax.
Janelle Brown
August 6, 2020 11.30am

Seriously?! Perhaps if they had asked more questions in the application process then it would not have been so easy for people to be approved. Surely when they set up the "application" webpage they could have added a couple more questions to make people think twice. Could have also added a caveat that said if deemed not eligible then tax would be applicable that would have made more people think before submitting. ATO needs to take responsibilty for not setting it up correctly not penalise people.

Alan Fay
August 7, 2020 5.33am

The ATO has become quite arrogant. They have, along with Morrison, affectively set ordinary Australians' up for complete failure. Initially they lacked explanation regarding the consequences of early access to some super. They did not make it clear exactly who this was for. I would love to see a class action against the ATO if it were possible. Most Australians were acting honestly not like the ATO's suggestion to the contrary. Just goes to show the contempt the ATO really has toward tax payers and goes a long to show how this current government's contempt toward unemployed and low income people really is, in the gutter! To now threaten these people with massive fines is a disgrace.

Mike Goan
December 1, 2020 4.44pm

Fining for early release will mean that person will be even less capable of funding their own retirement, forcing them to work longer. LNP wins again.

Matthew Barrington
December 29, 2020 7.26am

I see this loose policy as a clever cash cow by the government, first it's a quick cash stimulus to the economy without costing the government anything, then later with the taxation and possible fines imposed acting as a free stimulus back to the government to assist in paying back the deficit. Government gets to have its cake and eat it too, well played scomo.

Nate Swinny
February 16, 2021 3.38pm

It's weird how our super is meant to be our money for retirement , yet there are consequences of drawing it out that include fines larger than what the amount drawn out is, so in reality, it must not be our money then isn't it, and the government is f**king us? And p.s there are some people around Australia who don't plan to have to live off their super or become a pensioner.

John Bawa
July 3, 2021 1.03am

Hi everyone , i took twice of my super last year cause i was so desperate to pay off my debt , and now iam worry about this, cause of the tax time this year do you think im going to get hefty fine? Pls let me know if any one know .thanks guys.

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