The ATO has revealed the strategy where individuals gain early release to their superannuation benefits under the COVID-19 economic relief measure and subsequently make recontributions back into their super fund to gain a tax advantage is of concern, but has not been prevalent during the first tranche of the instrument.
“I’m pleased to say we’ve looked at this sort of behaviour and we haven’t really seen a huge amount of it [happening],” ATO SMSF segment deputy commissioner Steven Keating said during a session at the recent LightYear Docs 2021 Virtual Strategy Summit.
However, Keating pointed out while the strategy is not common, the regulator is still concerned about it and will be looking to take action against those who may potentially implement it during the second tranche of the coronavirus relief.
“Now that we’re in the second tranche of the early release of super, anyone that we did see that behaviour occur with [in] the first tranche, we’ll soon be having conversations with them,” he warned.
He said the ATO will also be seeking assistance from auditors to address this issue.
“[When auditors have] seen that an SMSF member has applied [for the early release of super] we’re not asking them to diligently go through and check their credentials, or [determine] that they weren’t eligible, but if they notice that some contrived arrangements have in fact occurred, we are asking them to report that to us on an ACR (auditor contravention report),” he said.
Further, he made clear the ATO’s unfavourable attitude toward this strategy.
“From my point of view we’d like to go back to what the intent of the measure was. Early release of super was introduced to provide much needed relief for Australians who are suffering financially,” he pointed out.
“So while the government didn’t stipulate how an individual could use their super, the ATO takes a very dim view of individuals whose intent or purpose is contrary to the spirit of the law.”
The regulator had previously indicated it will be pursuing people who have exploited the early super release scheme.