- 03 April, 2020
Coronavirus - early access to superannuation
One of the measures announced by the Government to help people affected by the current economic downturn resulting from the Coronavirus pandemic is to allow the early access to superannuation benefits.
In the main, superannuation benefits are preserved. That is, they cannot be accessed until a condition of release have been met. Conditions of release include events like retirement, turning 65, becoming permanently incapacitated and the like.
There are some circumstances where superannuation benefits may be released early, such as in cases of severe financial hardship and on compassionate grounds.
With the advent of COVID-19, the Government announced an additional temporary condition of release that will enable eligible people to access up to $10,000 of superannuation benefits in the 2019/20 financial year, and a similar amount in the 2020/21 financial year.
To apply for access to funds in the 2019/20 financial year, an application must be made to the Australian Taxation Office between 20 April 2020 and 30 June 2020.
If intending to seek funds in 2020/21, an application will need to be made between 1 July 2020 and 24 September 2020. Applications cannot be made after 24 September 2020.
Only one application can be made in each of the financial years. If an application is made to access (say) $6,000 in 2019/20, a second application cannot be made to access the remaining $4,000 in that same year. However, an application may still be made to access up to $10,000 in 2020/21.
Any amounts accessed under this condition of release will be paid free of tax and they will not be assessed as income for the purposes of assessing entitlement to social security benefits such as the Jobseeker Payment.
To be eligible for the early release of funds a person must:
Be unemployed, or
Be eligible to receive a Jobseeker Payment, Youth Allowance Jobseeker, Parenting Payment, Special Benefit or Farm Household Allowance, or
Since 1 January 2020:
they were made redundant, or
their working hours were reduced by 20% or more, or
if a sole trader, their business was suspended or suffered a reduction in turnover of 20% or more.
A reduction in working hours of 20% or more is relative to working hours or turnover for the September and December 2019 quarters.
An application for release of benefits is to be made to the Australian Taxation Office via the myGov website: www.my.gov.au.
Alternatively, and primarily for people unable to access online services, a request can be made by contacting the Australian Taxation Office on 13 10 20.
The Australian Taxation Office will authorise the applicant’s superannuation fund to pay the amount released directly to the applicant.
Before accessing superannuation benefits, it is important to consider two things:
Accessing superannuation benefits early will reduce the amount that is available for retirement, and
Accessing superannuation early that results in an account being closed, or reduces an account balance to less than $6,000, may result in the loss of valuable insurance cover.
Before lodging a request for the early release of superannuation benefits, consider seeking advice from a financial adviser. They may be able to suggest alternatives to help address short-term financial difficulties rather than having to withdraw money from your superannuation.
Remember, practice personal hygiene, cover your face when coughing or sneezing, maintain social distancing, and stay safe…we will get over this soon.