The ATO has repeated its warning it will come after people exploiting the superannuation early release scheme (ERS) under COVID-19 relief provisions, adding it will use data-matching tools to determine if people were eligible to withdraw funds or recontributed them for a tax advantage.
In an update on its website dealing with the integrity of the scheme and directed at tax agents, the ATO stated that ensuring the integrity of the ERS was a priority and it would act against deliberate misuse of the scheme.
The regulator said it was focused on applications where there was no change to income or employment, where there were artificial arrangements in place or false or fraudulent attempts made to meet the eligibility criteria, or where super was withdrawn and recontributed for a tax advantage.
“Withdrawing super under the COVID-19 early release program for the main purpose of recontributing it into a super fund to claim a tax deduction is not allowed,” it said.
“We consider this a scheme to obtain a tax benefit under the general tax anti-avoidance rules. We will review all super amounts released under COVID-19 that are recontributed for the main purpose of obtaining a tax benefit.”
It noted tax agents should warn any clients planning on claiming a tax deduction for a super contribution withdrawn under the COVID-19 ERS that they could face the removal of any tax benefit, administrative penalties and interest charges.
In an update on another part of the website directed to individual taxpayers, it said it had already seen cases of the type of behaviour listed above and had stopped applications and prevented the early release of superannuation funds.
It added that it would draw on a number of data sources, including single-touch payroll reporting, income tax returns, super fund reports and third-party government agencies, to check if any ERS claims were made incorrectly.
“We are investigating some cases and may consider it appropriate to apply the general anti-avoidance rule for income tax (known as Part IVA) in relation to a COVID-19 early release of super arrangement if you (or a representative) enter into a scheme mainly for the purpose of obtaining a tax benefit,” it said.
It pointed out false and misleading claims to access the ERS would result in the claimed amount being considered as assessable income and tax must be paid on it, while each false and misleading statement could result in a penalty of $12,000.
Additionally, withdrawn sums that are recontributed for a tax benefit could result in excess contributions tax, contributions tax and Division 293 tax.
In May, the ATO and Australian Federal Police investigated efforts to access super fraudulently, while SMSF auditors have also been encouraged to report any attempts to gain ineligible access to the ERS they may see.
