1. Giving Individuals Early Access to Their Superannuation
While superannuation helps people save for retirement, the Government recognises that for those significantly financially affected by the coronavirus, accessing some of their superannuation today may outweigh the benefits of maintaining those savings until retirement.
How much can you access if you are eligible?
Eligible individuals will be able to apply to access up to:
$10,000 of their superannuation before 1 July 2020;
- A further $10,000 from 1 July 2020 until 31 December 2020 (extended from 24 September 2020).
Who is eligible for the early release of superannuation due to coronavirus?
To apply for early release, you must satisfy one or more of the following requirements:
- You are unemployed.
- You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), 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;
- If you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.
There is no requirement that you are already receiving Commonwealth income support payments and there is no waiting period. In addition, there are no income or assets tests. For example, even someone with a very high salary who remains employed and has other assets could access this payment as long as their working hours have been reduced by 20% after 1 January 2020.
How to apply for an early release of superannuation due to coronavirus?
Applications for early release of superannuation can be made through myGov. If you don't already have a myGov account, you can set one up by selecting "create an account".
Applications for the 2020-21 Financial year can be made from 1 July 2020 to 31 December 2020 (extended from 24 September 2020). Importantly, if you have previously applied and accessed your superannuation in the 2019-20 Financial Year and wish to access a further amount up to $10,000 in the 2020-21 Financial Year, you will need to submit a new application through myGov provided you still meet the eligibility.
If your application is successful, the ATO will issue a determination evidencing your eligibility which will be sent to your myGov inbox. Importantly you must not access your superannuation before the ATO confirms your eligibility and approves your application.
My application cannot proceed since my SMSF is not recognised by the ATO, how can I apply?
Your SMSF is not recognised by the ATO, usually caused by one of the following reasons:
- Your SMSF was established in the current Financial Year and no Annual Return has even been lodged with the ATO. As a result, the ATO does not have your SMSF information;
- Your SMSF was established in a previous Financial Year but had not transacted until the current Financial Year. Since no Annual Return has been lodged with the ATO, the ATO does not have your SMSF information;
- Your SMSF was established in a previous Financial Year but has one or more overdue Annual Return(s).
In the above scenarios, you need to phone the ATO directly on 13 10 20. The ATO operator will verify your identify and help you to complete the application over the phone. When contacting the ATO, you may be requested to provide the SMSF's name, ABN or TFN, your personal TFN, and if applicable, the reference number detailed on an ATO notice.
My application has been approved by the ATO, do I need to send the outcome letter to ESUPERFUND now?
No. Please retain the approval letter for your own records at this stage. The document should be provided as part of the checklist completion process.
Will ESUPERFUND release my super benefit to my bank account or do I transfer funds myself?
Please note that ESUPERFUND does not have transaction access to your SMSF bank account and we are not authorised to make any payments on your behalf.
Provided your account balance in the SMSF is greater than the release amount specified on the ATO letter, you can transfer cash from your SMSF bank account to your personal bank account.
I do not have sufficient cash in the SMSF bank account, what should I do?
We caution that you can only make a single payment for each application approved. If your SMSF has insufficient cash, you need to convert some investments to cash (i.e. sell the asset and deposit proceeds into the SMSF bank account) and then withdraw the entire amount in one single transaction.
Are there any adverse consequences if I choose to withdraw this payment?
The following table summarises the potential consequences of this payment on your other interests:
||None. You will not need to pay tax on amounts released due to coronavirus.
|Social Security Payments
||None. The money you withdraw due to coronavirus will not affect your Centrelink or Veterans’ Affairs payments.
Life / Total Permanent Disability.
|Possible. Insurance may not be available if you fully withdraw your superannuation or your superannuation balance reduces to less than $6,000. Consider whether you need to seek financial advice before submitting your application to the ATO.
What documentation does ESUPERFUND require if I withdraw this payment?
If you access your superannuation under this special provision, you will be required to provide a copy of the ATO’s determination for audit purposes as part of the checklist completion process.