Superannuation benefits are generally required to be preserved in the superannuation system until retirement and early release of superannuation benefits are only permitted in certain very restricted circumstances. These rules have temporarily been amended by the stimulus measures recently enacted by the Federal Government in response to the adverse economic effects of COVID-19.
KEY TAKE OUTS:
- The Federal Government’s economic stimulus package allows eligible individuals to withdraw a maximum amount of $20,000 from their superannuation.
- Early access of superannuation is available to individuals who have been adversely affected by COVID-19.
- Applications for early access of superannuation must be made by 24 September 2020.
- Individuals should obtain financial advice prior to applying for early access of superannuation.
Under the new measures, eligible individuals affected by the pandemic can withdraw a maximum amount of $20,000 from their superannuation or retirement savings account on compassionate grounds. Any applications for this release must be made within six months of the amendments commencing, that date being 24 September 2020.
How much superannuation can be accessed?
Eligible individuals are permitted to access two releases in each financial year:
- Up to $10,000 between 20 April 2020 to 30 June 2020; and
- Up to $10,000 between 1 July 2020 to 24 September 2020.
It is important to note that if a person applies for a release of less than $10,000 for either financial year, they will not be able to apply for another release in the same financial year.
Who is considered eligible?
To be eligible for the early access of superannuation, a person must satisfy any one of the following requirements:
- At the time of applying, they are:
- Eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment or special benefit under the Social Security Act; or
- Eligible to receive the farm household allowance under the Farm Household Support Act 2014; or
- On or after 1 January 2020 the person:
- Was made redundant;
- Their working hours were reduced by 20% or more; or
- If the person is a sole trader, their business was suspended or there was a reduction in their turnover of 20% or more.
The amendments do not specify any minimum documentation or evidentiary conditions for meeting these requirements. Individuals are required to self-assess their eligibility. It is important to assess your eligibility accurately as there are penalties for making false and misleading statements.
How to apply for early access of superannuation?
A person can apply for early release of superannuation through the ATO’s online services using the myGov website.
Implications of accessing superannuation funds early
Accessing your superannuation early may affect your superannuation balance and may affect your future retirement income. It is recommended that individuals obtain financial advice prior to applying for early access of superannuation.
For further information please don’t hesitate to contact:
Contact Campbelltown Lawyers today.
This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.