It is understood that the ATO’s online systems downtime had mostly affected individuals trying to lodge their tax return or apply for the early release of superannuation.

“This disruption was the result of a small component failure, which has reduced the capacity for processing these matters,” an ATO spokesperson said.

“We have identified the area of the system that has failed and are in the process of replacing this component as quickly as possible.

“As our technicians work to fix the issue, we have temporarily reduced the number of people who can access our online services for individuals.”

The ATO insisted that it had conducted “extensive testing” and boosted the capacity of its systems in anticipation of significant demand for its services this tax time.

“We apologise for this inconvenience and will update the public as soon as the matter has been fully resolved,” a spokesperson said.

1 July rush

The new financial year marks the first day taxpayers can lodge their tax returns, with the profession and the ATO having predicted that many individuals would be rushing to lodge in anticipation of larger refunds in light of the COVID-19 crisis.

The first day of 2020–21 also allows eligible citizens and permanent residents of Australia or New Zealand to apply to access the second tranche of up to $10,000 of their super due to COVID-19.

Applications for the first round of up to $10,000 of super closed on 30 June, with the latest APRA figures revealing that it had received 2.4 million applications, resulting in $17.1 billion paid out as of 21 June.

APRA has anticipated a high volume of applications for the second tranche of the COVID-19 Early Release of Superannuation Scheme in the first week of July, despite the ATO stepping up communication that it will be closely policing the eligibility criteria.

COVID-19 early release of super behaviours that will attract the ATO’s attention include artificially arranging affairs to meet the eligibility criteria, applying when there is no change to your regular salary and wage or employment information, withdrawing and re-contributing super to claim a tax deduction, and making false statements or fraudulent attempts to meet the eligibility criteria.

The ATO recently acquired the data of 3 million Australians from Services Australia to bolster its data-matching program, and noted that it will scrutinise Single Touch Payroll data to check for incorrect claims.

Incorrect claims could see fines of up to $12,600 being imposed, with the minimum penalty to include the cash withdrawn as part of the individual’s assessable income and taxed at the respective marginal tax rate.