A complainant that had recently been diagnosed with stage four prostate cancer, was advised (by their doctor) to have surgery as soon as possible to remove the cancer. Understandably, the surgery was time critical.  The complainant needed to borrow money from a family friend to make the upfront payment for the surgery as well as other medical expenses. The complainant intended to repay their family friend by applying for an early release of their superannuation on compassionate grounds.  Applications for compassionate release of superannuation are set out in regulation 6.19A of the Superannuation Industry (Supervision) Regulations 1994 and are currently administered by the ATO but have previously been administered by the Department of Human Services (DHS) and the Australian Prudential Regulation Authority (APRA).  

As per section 4 of the Superannuation Industry (Supervision) Act 1993 – the Commissioner of Taxation is generally responsible for self-managed superannuation funds, data and payment standards, tax file numbers and the compassionate release of superannuation amounts. 

Importantly, there has not been any legislative changes to the eligibility for early release of superannuation on compassionate grounds across the different periods of administration – that is, by the ATO and DHS, and APRA. 

Following the ATO’s consideration of the complainant’s application, the ATO informed the complainant that their application had been rejected on the basis that the surgery and medical expenses had already been paid. The ATO’s policy was to only approve compassionate release of superannuation for unpaid expenses. Therefore, if the expense had already been paid, for example by using a loan, a credit card or money borrowed from family or friends, then the applicant would not meet the eligibility requirements for compassionate release of superannuation. The complainant sought an internal review of the ATO’s decision which affirmed the ATO’s original decision. 

The complainant subsequently lodged a dispute with the IGTO. The IGTO’s investigation initially focused on the legislative basis that the medical expenses for early release of superannuation on compassionate grounds had to be unpaid. The IGTO also referred the ATO to a 2014 version of the DHS’s website which suggested that applications for compassionate release of superannuation to repay a loan, where an applicant borrowed money to pay for their medical expenses, may have been approved. Accordingly, the IGTO recommended that the ATO reconsider the complainant’s original application based on the specific circumstances. The ATO responded that further reconsideration of the complainant’s original application would not lead to a different outcome. 

The IGTO further examined the relevant legislative provisions and identified that it included a specific paragraph which provided the ATO with legislative residual discretion to approve release on grounds that are consistent with the compassionate grounds of release in the legislation. The IGTO formed the view that this legislative residual discretion could be applied to the complainant’s circumstance.  

The IGTO also further investigated the circumstances described on the 2014 version of the DHS website. This led the IGTO to locate a publicly available version of APRA’s guidelines from 2001.  The APRA guidelines stated that when an applicant had incurred debts by borrowing money to pay for expenses that were ordinarily grounds for compassionate release and have difficulties repaying the loan, then a release for the relevant expense can be approved under the legislative residual discretion. Furthermore, the guidelines set out what evidence was required from applicants at the time to approve their applications for early release of superannuation. 

The IGTO escalated its investigation to Senior ATO Executives and provided to them the evidence of how previous administrators would consider and approve applications for early release of superannuation on compassionate grounds to repay a loan that was paid for expenses such as medical expenses that were ordinarily grounds for compassionate release. The IGTO also communicated its view to the ATO that if the ATO were to adopt this approach, then further information would be required from the complainant to determine if they were eligible on this basis. 

The ATO established that the DHS approach in 2014 would not have resulted in a release of superannuation to the applicant, and that this outcome was also implicit in the guidance materials provided when administration passed to the ATO in 2018.   

Following the ATO’s further review of the relevant legislation and the policy intent, however, the ATO informed the IGTO that it had determined that a release of superannuation can be granted in certain limited circumstances where: 

1. a loan was taken out by an applicant to pay for medical treatment for themselves or their dependant,   
2. the applicant would have been eligible for release under the primary compassionate ground if the expense had not been paid, and 
3. all or part of that loan remains unpaid, and the applicant is assessed as being unable to repay such a loan. 

As a result of the ATO’s change in policy, it was agreed for the ATO to directly contact the complainant and request the relevant evidence required to determine whether the complainant was eligible for compassionate release on this basis. 

Once the ATO contacted and obtained the relevant evidence from the complainant, the ATO made the decision to approve the complainant’s request for early release of superannuation on compassionate grounds to repay the loan that was obtained from a family friend to pay for the complainant’s surgery and medical expenses.  

As a result of the IGTO’s investigation, the ATO has also agreed to review all of its internal guidance material and publicly available information to determine what changes are necessary to reflect this update to the ATO policy. 

A business sought to acquire excise-paid spirit in containers of more than 2 litres (i.e. bulk containers) to repackage them into smaller containers for retail sale. The ATO advised the business that they could only acquire excise-paid spirit in containers of 2 litres or less for repackaging. Alternatively, the business may acquire excise-unpaid (‘underbond’) spirit in bulk containers for repackaging if they had an excise storage licence. The ATO officer suggested, however, that the licence would unlikely be granted as it would cause an unnecessary delay to the payment of excise.  

The business sought assistance from the IGTO as they were concerned that the ATO’s advice to them was incorrect. If the ATO’s advice was correct, the business was concerned that similar businesses only had two options:  

1. acquire excise-paid spirit in many small containers of 2 litres or less – this would create inefficiencies and produce large and unnecessary amounts of waste; or  
2. acquire spirit underbond, provided that an excise storage licence is granted by the ATO – this would impose disproportionate regulatory burden on small businesses.  

As a result of the IGTO’s investigation:  

• the IGTO provided independent assurance to the business that the ATO’s advice (other than the granting of storage licence) was in line with section 58 of the Excise Act 1901;  
• the ATO issued a written apology to the business because the previous ATO advice about not granting a storage licence to the business was not appropriate and did not consider the business’s operations; and  
• the ATO made available an officer from the ATO Excise Centre to assist the business with applying for a storage licence. 

In the Federal Budget (11 May 2021), the Government announced that it would reduce the eligibility age (from 65 to 60 on 1 July 2022) for downsizer contributions (a one off, post-tax contribution for each member of a couple following the sale of their main residence that at least one of them has owned for more than 10 years) into superannuation. As downsizer contributions are required to be made within 90 days of receiving the proceeds of sale, the complainant contacted the ATO to discuss whether she would be able to obtain an extension of 35 days following the 90 day period of receiving the proceeds of sale of her property as her settlement date was more than 90 days before 1 July 2022. 

The complainant explained that she had initially contacted the ATO and was advised that she would not have any difficulties obtaining an extension. The complainant proceeded to sell her property and contacted the ATO to request the necessary extension. However, the ATO advised her that she was not eligible for an extension. The complainant explained that she is financially disadvantaged as a result of acting on incorrect information she had received from the ATO.  

The ATO initially advised that it was not able to locate the telephone recording where the initial advice had been given. Following the IGTO’s investigation, a copy of the telephone call recording was located and the ATO acknowledged that it had provided incorrect advice to the complainant.  

The complainant subsequently advised that she was able to defer settlement of her property so that she would be able to make a downsizer contribution in the first week of 1 July 2022 (i.e., within 90 days of settlement).  

The IGTO advised the ATO of the new settlement date and requested the ATO confirm whether the complainant would be eligible to make a downsizer contribution. The ATO advised that the settlement date of the sale of the property is required to be on or after 1 July 2022. In the complainant’s circumstances, she would not be eligible to make a downsizer contribution as her settlement date is prior to 1 July 2022.  

As part of our investigation, the IGTO drew the ATO’s attention to information on its website which does not include any requirement that the settlement date be on or after 1 July 2022. The ATO reconsidered its position and subsequently confirmed that the complainant would be eligible to make a downsizer contribution.

The complainant was under a temporary guardianship arrangement whereby their financial affairs were managed by a trustee appointed to be their guardian. The trustee lodged several income tax returns for the complainant and nominated for any refunds to be deposited into the trustee’s bank account. After the ATO processed the tax returns, it refunded approximately $15,000 to the nominated account. Following the expiry of the guardianship arrangement, the trustee ceased to act as the complainant’s guardian and returned the monies to the ATO via electronic funds transfer (EFT). Unfortunately, the ATO was unable to locate the returned monies because the ATO’s system never identified it as belonging to the complainant’s account. This was due to an unfortunate coincidence whereby the 15-digit reference number in the trustee’s bank transfer matched details relating to a third party taxpayer (unrelated to either the complainant or the trustee) on the ATO’s system. 

The complainant approached the ATO to request their refund and lodged a complaint in May 2022. The ATO’s complaints area advised the complainant it had correctly issued the refund to the bank account nominated on the tax return, that it could not assist further and that this was now a matter between the complainant and their former guardian. The ATO did not request the complainant to provide any additional information to assist it with locating the refund, including records of the trustee’s EFT payment which evidenced that the monies had been returned to the ATO.  

The IGTO commenced a dispute investigation with the ATO and supplied the trustee’s EFT records to the ATO which proved to be instrumental in enabling the ATO to locate the missing monies. Within three weeks of the IGTO commencing an investigation, the ATO located and refunded the monies directly to the complainant’s bank account and the matter was resolved. 

A complainant approached the IGTO to raise concern that the ATO was pursuing him for an amount of taxation debt through a Director Penalty Notice (DPN) that was excessive. Directors are personally liable for some undischarged company debts, including superannuation guarantee charge (SGC). DPNs are used to recover the tax debts incurred by a company from its directors personally.  

Due to the complex technical nature of the matter, the complainant had sought to engage with the ATO over a lengthy period via multiple channels, including lodging an objection, appealing the matter to the Administrative Appeals Tribunal (AAT) and lodging a formal complaint with the ATO complaints team. However, throughout these processes, the ATO did not sufficiently address the complainant’s tax issue.  

The complainant had a large amount of information which he believed showed that the amounts sought to be recovered through the DPN was incorrect. However, as the company had been de-registered for a period of time, the complainant did not have authority to discuss or seek details about the company’s debts, including with the ATO. The IGTO commenced an investigation to ensure that the ATO had considered the information in the taxpayer’s possession and to confirm the amounts in the DPN were correct.  

As a result of the IGTO investigation, the ATO agreed to review the information in the complainant’s possession in the interests of fairness and transparency. Furthermore, through the course of the investigation, the ATO acknowledged that there were keying and other administrative errors in calculating the debts that were the subject of the DPN. Any changes to the underlying debts of the company would also correspondingly result in a reduction of the DPN debt. However, as the company had been de-registered, it was not possible to amend its accounts to reflect the reduced debt amounts in ATO systems.  

To remediate the situation, the ATO determined that it would be appropriate to support an application by the complainant to the Department of Finance for a waiver of debt. 

The complainant was a director of a charity that had been wound up due to the actions of a former employee who had defrauded the charity. The fraud was identified, and the employee arrested and convicted. The employee had also been responsible for managing the charity’s payroll and superannuation obligations and failed to discharge those obligations.  

The complainant approached the IGTO for assistance in engaging with the ATO in relation to notices he had received concerning the charity’s outstanding superannuation guarantee (SG) obligations. The complainant raised concerns that the ATO was not returning his calls or responding to his queries about the notices. 

In addition to commencing an investigation into the matter, the IGTO also considered the complainant’s case and determined that, in view of the fraud that had been perpetrated, there may be sufficient grounds for a waiver of debt application to the Department of Finance. The IGTO provided information and guidance to the complainant in relation to lodging the waiver application.  

The waiver application was subsequently approved, which reduced the charity’s SG debts to nil.  

The IGTO does not have any insight in relation to other criminal or civil actions that may have been undertaken to seek compensation or reparations for losses suffered by the charity and its employees as a result of the fraud. These matters fall outside of the IGTO’s jurisdiction. 

The taxpayers had, for 10 years, managed a successful restaurant. In October 2019, the taxpayers incorporated a company and registered for an Australian Business Number (ABN) and purchased the restaurant from the former owners with ownership to commence on 31 January 2020. In December 2019, the company executed a lease for the restaurant’s premises to commence when it took over the business. The restaurant’s operations continued seamlessly and the company registered to report GST on a quarterly basis as had always been done.  

In 2020, the company applied for access to Boosting Cash Flow (BCF) payments to support it through the COVID-19 pandemic. The ATO initially rejected the company’s eligibility to BCF on the grounds that the company could not have lodged a GST return for the quarter ended 31 December 2019 as its business commenced operation after 1 January 2020.  

The IGTO commenced an investigation and, as a result of which, the ATO agreed to undertake an internal review of the matter. The internal review found that in November 2019, the company had opened a bank account for the new business, which constituted a taxable supply for consideration for the purposes of the BCF. Accordingly, the Commissioner’s discretion was exercised in this case to allow the company later time to provide notice of a taxable supply, resulting in the company obtaining access to BCF.