Through these unpredictable times, we extend our thoughts to you and your family, especially if you have lost employment or are otherwise experiencing financial hardship and other stress due to the coronavirus outbreak.
Safeguarding your money sits at the heart of everything we do and Australians experiencing financial stress due to the coronavirus outbreak may soon be able to access a portion of their super.
The Australian Government has passed the “Coronavirus Economic Response Package Omnibus Bill 2020“. The new legislation was announced on Sunday 22 March 2020 and was fast tracked through parliament as part of the Australian Government’s response to the economic impact of COVID-19.
How much super can I access under the Coronavirus Economic Response Package?
The government is allowing individuals affected by COVID-19 to access up to $10,000 of their superannuation in 2019–20 and a further $10,000 in 2020–21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
Eligible individuals will be able to apply to access up to:
- $10,000 of their super before 1 July 2020
- a further $10,000 from 1 July 2020 until 24 September 2020.
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.
You will not be required to attach evidence to support your application; however, you should retain records and documents to confirm your eligibility.
Withdrawing your superannuation may affect your:
- income protection insurance
- Life / Total Permanent Disability insurance cover.
Insurance may not be available on accounts that:
- are fully withdrawn
- have a balance below $6,000.
How do I access my superannuation early, due to coronavirus hardship?
To do this, you will need to set up a myGov account and link government services to that account, such as the Australian Taxation Office, where your super details are also recorded, and Centrelink, which is handling other parts of the stimulus package such as relief payments.
The ATO says that the full application process (when the scheme comes into effect, by about mid-April) is as follows:
- Go to myGov, access the ATO service portal
- Apply for the COVID-19 early release super payment, ensuring that you can “certify that you meet the above eligibility criteria”, which typically includes providing payslips or other documents as evidence (further detail is expected to be released about this)
- The ATO will issue you with a “determination” – a decision on your eligibility
- If you are eligible, the ATO will send that determination statement to your super fund, advising the fund to release your payment
- The fund will then make the payment to you “without you needing to apply to them directly”
The ATO also states that “to ensure you receive your payment as soon as possible, you should contact your fund to check that they have your correct details, including your current bank account details and proof of identity documents”.
Early release of superannuation for SMSF Members
If a member of your SMSF is dealing with adverse economic effects of coronavirus, they may be able to access their super on compassionate grounds in certain circumstances.
From mid-April, eligible members can apply for a release of up to $10,000 of their super before 1 July 2020. They will also be able to access a further $10,000 from 1 July 2020 until 24 September 2020.
To apply for early release, your member must satisfy any one or more of the following requirements:
- They are unemployed.
- They 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
- they were made redundant
- their working hours were reduced by 20% or more
- if they are a sole trader, their business was suspended or there was a reduction in their turnover of 20% or more.
If your member is eligible, they can apply through myGov from mid April. We will then issue them with a determination advising of their eligibility to release an amount. When you receive the determination from the member, you will be authorised to make the payment.
Trustee responsibilities for early release of super
As an SMSF trustee, you are responsible for you and your members’ retirement savings. Please make sure you are eligible for early release of super before you release any funds from your SMSF.
- COVID-19 (novel coronavirus) – early release of superannuation
- The Australian Government’s economic response to coronavirus
The other notable changes to the insolvency laws through the passing of the bill “Coronavirus Economic Response Package Omnibus Bill 2020“ include the following:
- The monetary threshold to issue a statutory demand has increased – a statutory demand may now only be issued on a company by creditors for a debt of AUD $20,000 or more (previously AUD $2,000).
- The time limit to respond to a statutory demand has been extended – Companies will now have six months to respond to a statutory demand (previously 21 days).
- The amendments only apply to statutory demands issued after the legislation commences.
- The amendments are temporary – they will only apply for six months unless that period is extended.
- The monetary threshold to issue a bankruptcy notice has increased – the threshold debt required before a creditor can initiate bankruptcy proceedings against a debtor is now AUD20,000 (previously AUD5,000).
- The time limit to respond to bankruptcy notices has been extended – Debtors will now have six months to respond to a bankruptcy notice (previously 21 days).
So hopefully with all these government intended reliefs we can navigate our way through these unpredictable times. Most of all have faith and try to stay positive. Stressing about things that have not happened yet only causes more issues. However, it is important to be aware and prepared for anything, and have options. Stay safe and look after each other.