The vast majority of applications for the early access to superannuation from SMSF members have been legitimate, according to the ATO, which is currently examining 2000 individuals it suspects of making an ineligible claim for funds.
ATO SMSF approved auditors portfolio director Kellie Grant said the regulator had, as at 12 August, received 3.97 million applications from 2.74 million people leading to $33.27 billion of superannuation being released since 19 April, and of that 35,000 applications had come from 19,000 SMSFs, which had released $341 million.
Speaking as part of the Tax Institute’s 2020 National Superannuation Online Conference, Grant said the SMSF applications had been filtered through a range of integrity checks to mitigate the risk of inappropriate behaviour by applicants.
“We commenced reviewing some of the applicants we were concerned did not meet eligibility criteria based on data matching from single-touch payroll reporting, income tax returns and information from their funds and government agencies,” she said.
“We found 90 per cent of people who applied for early release of superannuation had in fact been eligible and we are in the process of taking a closer look at 2000 people who we think are at a high risk of being ineligible.”
The ATO has previously warned tax agents and super funds members that claims for early access to super would be reviewed and action taken if the claims were deemed ineligible.
She noted the impact of early release, and the COVID-19 pandemic, on SMSFs was reflected in the total amount of assets held in the sector at the end of the financial year, falling from $747.6 billion at the end of June 2019 to $733 billion at the end of June 2020.
Despite this impact, she also pointed out new SMSF registrations climbed in the last financial year, with 22,018 new funds registered as at 30 June 2020, which was a 7 per cent increase compared to 2019.
“Registrations increased for the first time in five years and there was a spike in March 2020, at the onset of COVID-19, where they increased by 35 per cent,” she noted.
She added that of the new funds registered in the 2020 financial year, 19.9 per cent, or 4391 funds, were examined to ensure they were not being set up for illegal early release purposes.
“When someone registers a new SMSF, or joins a new fund, it is put through a secure front-door process and using risk attributes we identify individuals who are trying to enter the system for the wrong reasons,” she said.
“Those funds were offlined and reviewed because our model rated the individuals setting them up as likely to do so for early release.
“As a result of the reviews, 288 funds had their details withheld from Super Fund Lookup … and we cancelled the Australian business number of 963 newly registered funds and were able to protect $126 million in super from leaving the system.”