The Coronavirus (COVID-19) pandemic has been a difficult time for everyone in Australia mentally as well as financially.
To help financially, the Government has put in place a temporary arrangement whereby you may be able to access your superannuation funds early, IF you have been adversely financially affected by COVID-19. Payments made do not attract tax if released under Covid-19 AND you have met eligibility requirements.
Even if you do meet these guidelines, you also need to be aware of the implications of assessing your super early.
To be eligible, you must be:
- a citizen or
- permanent resident of Australia and New Zealand
- require the COVID-19 early release of super to assist with the adverse economic effects of COVID-19.
In addition, ONE of the following circumstances must apply:
- you are unemployed
- you are eligible to receive, JobSeeker payment, Youth Allowance for job seekers (unless you are undertaking full-time study or are a new apprentice), Parenting payment, Special Benefit or Farm Household Allowance
- on or after 1 January 2020 either
- you were made redundant
- your working hours were reduced by 20% or more (including to zero)
- you were a sole trader and your business was suspended or there was a reduction in turnover of 20% or more (partners in a partnership are not eligible unless the partner satisfies any other of the eligibility).
You will not be required to attach evidence to support your application. However, the ATO will be performing integrity checks, so it is a good idea that you retain documents to support your eligibility. If you are found to have provided false or misleading information, they may issue fines, and/or have the amount withdrawn assessed as income, with tax becoming payable on the amount.
Implications of accessing your super early
Applications for the early release of super have closed for the 2019/20 Financial Year, however applications are available for the 20/21 year until 31st December 2020.
It goes without saying, accessing superannuation early will affect your super balance and affect your future retirement income.
Withdrawing super may have an affect on your:
- income protection insurance
- life and total permanent disability insurance cover.
(Insurance may not be available on accounts that have a low balance).
As always, you should consider whether you need to seek financial advice before applying for an early release of super.