The Government has allowed eligible people to access up to $20,000 from their super as a result of the Coronavirus crisis (a maximum of $10,000 in each of the 2019-20 and 2020-21 financial years).
As a recap, to be able to apply for early access to super, one of the following conditions has to be met:
- You are unemployed
- You are eligible to receive jobseeker payment, youth allowance for jobseekers, parenting payment special benefit, or farm household allowance
- On or after 1 January 2020:
o You were made redundant,
o Your working hours reduced by 20% or more, or
o If you are a sole trader, your turnover reduced by 20% or more.
Requests for early release of super must be made via your My.Gov account using the “Australian Taxation Office” tab. When requesting an early release, you will need to complete an online declaration that you have met one of the conditions mentioned above.
Once the Australian Taxation Office authorises the release of funds, they will forward an authority to your superannuation fund requesting they release the approved amount to you.
According the figures released by the Australian Prudential Regulation Authority (APRA), 2.3m applications for early release, totaling $15.9bn of payments had been made as of 15 June 2020. Ninety-fiver per cent of applications had been paid within 5 business days .
Those readers that meet one of the conditions mentioned above and wish to withdraw up to $10,000 from their super for the 2019-20 financial year, will need to ensure they lodge their application before 30 June 2020.
From 1 July 2020, people may apply to withdraw further funds from super, again up to a maximum of $10,000.The closing date for this round of early release funds will be 24 September 2020.
There are a couple of interesting facts that have come out of the early access to super arrangements:
- Early release scams: There have been reports of some Australians being targeted by fraudsters and, as a result, have lost some of their superannuation funds. While the numbers have not been large, it is a timely reminder for people to be aware of the risks of sharing personal data in response to unvalidated requests. We expect that there may be a resurgence of activity by scammers when the second round of applications can be made in July.
- Inappropriate requests for early release: Requesting release of super under the Coronavirus early release arrangement is a simple process. An application and a declaration are made online.
But what happens if I request the early release of my super, but I have not met one of the conditions?
The Australian Taxation Office will be conducting integrity checks to ensure that those who have requested the early release of their super have done the right thing. Where super has been accessed inappropriately, the amount withdrawn will be included as assessable income and is taxed at the person’s marginal tax rate. In addition, a penalty of up to $12,000 may be applied for making a false or misleading statement. We expect that the Australian Taxation Office will be cross-matching data to identify cases where ineligible applications for the early release of super have been made.
If you planning to apply for the early release of super benefits, it is important to check your eligibility before requesting access to super. If for whatever reason, you are unsure if you can access early release of superannuation, you should speak to a professional about your specific circumstances.
Whatever you decide to do, we can work with you to make sure your strategy suits your lifestyle, circumstances and financial goals. Contact us at 08 8231 4709 or info@centrawealth.com.au
By Peter Kelly on 24 June 2020 – centrepointalliance.com.au
