Unfortunately, due to the financial impact of the COVID-19 crisis, and the near shut down of our economy, many people will lose their jobs or have to cope with reduced hours of work and/ or reduced income.
In addition to the various stimulus packages that the government has introduced, it has also approved exceptional early release of superannuation funds under certain circumstances.
How much superannuation are you able to access?
Currently, people who are under retirement age are only able to access their superannuation funds on compassionate grounds in certain very limited circumstances.
However, for a limited period, people who satisfy the eligibility criteria outlined below will be able to access up to $20,000.00 from their superannuation fund – a maximum of $10,000.00 in the 2019/2020 financial year (ending 30 June 2020) and a maximum of $10,000.00 in the 2020/2021 financial year.
Any funds released under these special arrangements will be tax free, unlike funds released under the existing compassionate grounds.
Who is eligible for early release superannuation?
To be eligible the individual must demonstrate that, at the time of their application they:
- are unemployed; or
- are eligible to receive jobseeker payment; parenting payment or special benefits from Centrelink; or
- are eligible to receive youth allowance from Centrelink (other than on the basis that the person is a full time student or new apprentice); or
- are eligible to receive farm household allowance; or
- have been made redundant on or after 1 January 2020; or
- their working hours were reduced by 20% or greater since 1 January 2020; or
- if a sole trader, their business was suspended or had a reduced turnover of 20% or greater since 1 January 2020.
How to access early release superannuation?
Applications for early release of superannuation funds under this scheme are to be made to the Australian Taxation Office through the MyGov website. If the application is approved, the approval will be provided to the relevant superannuation fund, which will release the funds.
To date, the ATO has not advised what evidence it will require to establish eligibility. It is anticipated that the process will be set up and applications will be accepted from around mid April 2020. However, we note that the MyGov website is already under great strain so it is possible that there may be some delays in the process.
How many times can you apply to early release superannuation?
Only one application can be made in each financial year. This means that if a person applies for less than the maximum $10,000.00 they cannot apply for more in the same financial year.
What you should consider before accessing your superannuation
PLEASE NOTE that removing funds from your superannuation account will inevitably affect the amount of money available upon retirement. For people who are approaching retirement age this may be a disincentive to apply for early release of superannuation funds.
By providing this information Andersons Solicitors is not advising any person to apply for early release of superannuation funds, and we strongly recommend that you seek financial advice before doing so, particularly if you are approaching retirement.
Andersons solicitors does not provide financial advice and this blog should not be interpreted as constituting financial advice. We recommend that if you are considering making an application for early release of superannuation funds, you seek financial advice before doing so.