One of the early announcements from the Government in response to COVID-19 was to allow certain individuals limited access to their superannuation. This was a welcome announcement for many in the early days, but the details of how this could be accessed and when it would be available remained unclear. With further information being released, the who, what, how and when are detailed below.
You are eligible to apply for the early release of superannuation if:
- You are unemployed OR
- You are eligible to receive Job Seeker, Youth Allowance for Job Seekers, Parenting Payment (single or partnered), special benefit or farm household allowance OR
- On or after 1 January 2020, either:
- You were made redundant
- Your working hours were reduced by 20% or more
- Your business turnover reduced by 20% or more, if you are a sole trader.
If you meet any of the above criteria, you can apply to access a tax-free payment from your superannuation of $10,000 before 1 July 2020. A further payment of $10,000 can be applied for between 1 July 2020 and 24 September 2020.
Superannuation funds are not able to release money to individuals unless a condition of release has been met (ie retirement), or unless authority is received from the ATO. You need, therefore, to apply to the ATO via myGov before you can take any money out. This includes SMSFs, as tempting as the cash in the bank may be! There is no need to provide evidence to the ATO of how you have been impacted, but you are encouraged to retain evidence – and the power of data matching suggests that fraudulent applications will be discovered in time.
Applications will be accepted through myGov from 20th April, but it may take some time for them to be processed and approved. Individuals can register their interest via myGov right now, so they can be notified when applications open.
Be careful of the impacts withdrawing superannuation may have, both on long term plans and insurance policy payments. If a balance is fully withdrawn or falls below $6,000, insurance may no longer be available.
This measure may provide relief for those who cannot access any of the Job Seeker or Job Keeper payments – but each individual is encouraged to determine whether withdrawing superannuation is the best option available.
For more information
If you require further information regarding accessing your superannuation, contact your local RSM adviser today.