ATO to crack down on early super rorters
The Australian Taxation Office has warned it will investigate people rorting super withdrawals to avoid paying tax.
The ATO says it will crack down on taxpayers using a system loophole that allows someone to dodge paying personal income tax at the marginal rate.
According to the ATO, people are withdrawing money from super through the financial hardship measure tax free and then topping up their super account via a salary sacrifice at the superannuation tax rate of 15 per cent.
For example, a person on a salary of $100,000 is accessing $10,000 tax free through the scheme and then sacrificing $10,000 back into their super account, which results in $10,000 of their annual income being taxed at 15 per cent rather than the 37 per cent marginal tax rate.
The ATO said it was also noticing people artificially manipulating their wages in order to become eligible for the scheme.
Early super was implemented by the Federal Government as a measure to assist Australians who had become unemployed or experienced a reduction in working hours.
"We have seen some COVID-19 early release of super examples where people are doing the wrong thing," the ATO said.
"In some cases, we have stopped applications and prevented super money from being released."
The ATO is able to issue fines of up to $12,600 for people who make a false and misleading claim for access to early superannuation payments.
RateCity research director Sally Tindall said the ATO had made it clear it would call out people misusing the scheme.
"The scheme is designed to help people pay the bills and put food on the table," she said. "It's not there to serve as a tax break, and the ATO is on the lookout for people who exploit this loophole."
Industry Super Australia (ISA) has previously welcomed the crackdown, saying it sends a clear signal to people who are intending to make a dodgy application.
"Ineligible applicants undermine the credibility of this emergency scheme and could be holding up payments for those that desperately need money now," ISA chief executive Bernie Dean said.
Originally published as ATO to crack down on early super rorters