Will post-COVID-19 super top-ups be gamed?
Questions are being asked about whether the Australian Taxation Office (ATO) holds sufficient information about hardship superannuation early release recipients to prevent them from gaming the system if the Government introduces tax or other incentives to encourage recontributions.
Both CPA Australia and the major industry superannuation fund lobby groups have used pre-Budget submissions to urge the Government to provide incentives for people who took early access to recontribute to top-up their super, but there are concerns that such a move could lead to gaming the system.
The concerns have been expressed amid suggestions that some people may have already used the early release scheme to benefit from a recontribution strategy involving withdrawing a lump sum and recontributing these funds into super as a non-concessional or concessional contribution (where the member can claim a tax deduction for the contributed amount).
Deloitte superannuation partner, Russell Mason said that while he was in favour of measures which would encourage people topping up their superannuation balances after having taken early access, he believed such a regime might be open to gaming.
“Frankly, I think people who drew down on early access superannuation due to genuine hardship would find it hard to find the available funds for a top up but I do believe they should be given an incentive to do so if they can,” he said.
However, Mason reflected the views of some superannuation fund executives when he expressed doubts over whether sufficient information was being held by the ATO to preclude gaming of any waiving of contribution caps to encourage top-ups.
The ATO in the middle of last year issued a warning over how people used the early release scheme, referring to “a handful of people who try to take advantage and exploit the system for their own financial gain”.
“We will not tolerate anyone engaging in illegal behaviour or developing contrived schemes designed to take advantage of the COVID-19 stimulus packages. Where people deliberately exploit the system, we will take action. We've already seen some examples of people doing the wrong thing, and we've acted quickly and decisively.”
Recommended for you
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
The Senate economics legislation committee has recommended Schedule 1 of the Delivering Better Financial Outcomes legislation be passed as it is a “faithful implementation” of the recommendations.
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
