Koa: when recovery isn’t possible — but clarity still matters

Koa contacted our office after spending several years trying to recover unpaid superannuation from a former employer. Over time, they became increasingly distressed by what they saw as slow progress, limited information, and a lack of clear updates about what action was being taken.

The employer was a corporate trustee with multiple directors and a long compliance history. Based on their own past involvement in the business, Koa believed assets were being concealed through related entities to avoid paying debts. While the ATO had taken recovery action over the years, including issuing Director Penalty Notices and a statutory demand and yet there had been no meaningful recovery of the unpaid super.

A key challenge in this case was the ATO’s strict confidentiality obligations. Even where Koa felt they already understood what was happening behind the scenes, the ATO was legally limited in what it could confirm or disclose about its compliance and recovery activity. This contributed to frustration and a sense of being “kept in the dark”, despite genuine efforts underway.

Our role focused on clarity, expectation setting and care. We worked with the ATO to explain, in plain language, what information could be shared, what could not, and why. We asked the ATO to outline the general recovery pathway. This includes that the ATO will inform you by letter or email if they’re able to collect any unpaid super and distribute it to your super fund. This process may take some time, and not every referral results in the collection of unpaid super. We also acknowledged the emotional toll of a long-running matter where progress is slow and outcomes are uncertain.

When public registers later showed the employer moving toward deregistration, we helped Koa understand what that development might mean, without overstating its significance or creating false expectations.

Although the superannuation remained unpaid when the complaint was closed, Koa told us they felt heard, better informed, and clearer about the limits of what could be achieved.

Emily: when the law is applied correctly — but the outcome still feels wrong

Emily, a single parent, contacted our office after experiencing significant financial hardship following an error made when interacting with the First Home Super Saver (FHSS) scheme.

Emily intended to request an FHSS determination, but instead mistakenly lodged a request for release of her superannuation. Under the FHSS scheme, released amounts are paid to the ATO and treated as a credit, which can be automatically offset against existing tax debts. As a result, the released funds were applied to Emily’s prior ATO debts.

When Emily realised the error, she contacted the ATO to explain that she had not intended to access the funds at that stage. Due to rising living costs and financial pressure, she was unable to recontribute the amount or proceed with purchasing a home. She felt she had effectively lost the benefit of the FHSS scheme and was facing what she described as a “double penalty”.

We investigated the ATO’s administration of the FHSS release and the subsequent offsetting of the funds. This involved reviewing the relevant legislation, examining the timing of the release authority and offset, and engaging with the ATO about the scope of its discretion once the statutory process had occurred.

Our review found that the ATO’s actions were lawful and consistent with the legislative framework. Once the release occurred, the offset to existing tax debts was mandatory and there was no discretion available to reverse it. No defective administration was identified.

However, the outcome was clearly harsh, particularly given the purpose of the FHSS scheme and Emily’s personal circumstances. While we were unable to secure an individual remedy, the case highlighted broader fairness concerns about how FHSS releases can interact with existing debts and the limited safeguards available once a mistake is made.

These issues were escalated for systemic consideration, including referral to Treasury, to ensure the policy intent of the FHSS scheme is not undermined in similar cases.