The controversial coronavirus measure allowing Australians affected by the pandemic to tap into their retirement savings will close tomorrow.
But not before nearly three million people have taken a total of $36 billion out of their super accounts, according to figures provided by the ATO.
Treasury had initially estimated $29.5 billion would be accessed but then extended the scheme until the end of the year, in light of Victoria’s second coronavirus lockdown.
By the end of June, just over $20 billion had already been withdrawn and in July, Treasury estimated $42 billion would be accessed under the scheme.
The final total is set to come in below that figure, indicating use of the scheme slowed in the second half of the year.
The ABC reported in September that more than a quarter of people who accessed superannuation under the early release scheme made their decision within a day.
Critics argue those withdrawing their money now to meet short-term financial needs sacrifice long-term compound interest on their superannuation balance that may contribute to a more comfortable retirement.
Soon after the scheme’s introduction in April, the Federal Police began investigating attempts to defraud the scheme.
The ATO confirmed no penalties have been imposed to date.
Only those who were unemployed, eligible for some welfare payments, or had their hours or sole trade income reduced by 20 per cent were eligible.
“The ATO understands that some applicants may have made a genuine mistake,” a spokesperson said.
“In this instance, the ATO will work with them to help resolve their position.
“Only in serious cases where an applicant has deliberately applied knowing they were not eligible will the ATO apply penalties.”
In situations where an ineligible applicant has raided their savings, the amount withdrawn will become assessable income by the Tax Office.
Home purchase controversy
Liberal MP Tim Wilson attracted criticism earlier this week for encouraging people to withdraw their super in order to fund a home purchase.
“Aiming to buy a first home and struggling to save the deposit?” he tweeted.
“For 4 more days you may be able to access your super savings now to bring a purchase forward: earlier & cheaper.”
Treasurer Josh Frydenberg said in March the measure would “allow those Australians in financial stress as a result of the coronavirus to access more of their own money in superannuation”.
In response to Mr Wilson, Labor MP Andrew Leigh Tweeted at the ATO asking: “Is my Liberal colleague encouraging people to break the law by accessing super to buy a home?”
Prior to the introduction of the scheme, early access to super may have been granted in extreme cases such as being unemployed for six months and being unable to meet family living expenses.
These exemptions will still be available in 2021.
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