Early Access to your super

The Australian Government has implemented a temporary measure to allow super account holders to access up to $10,000 of their super in the 2020 financial year and a further $10,000 after 1 July 2020 to eligible individuals. These funds would not be taxed after they are withdrawn, according to the bill. Applications for early release of super will be accepted through ATO online services in myGov from 20 April. You can register your interest now by logging into your myGov account and following the intention to access coronavirus support instructions.

You should make a decision carefully as any step you take now in withdrawing your super could potentially reduce the amount of funds you have available for your retirement. While retirement may look distant for many of you right now, and accessing your fund now might look too tempting to miss, please remember that by withdrawing the funds now you are realising the losses as a result of the recent market fluctuations. It is like selling your house at the bottom of the market – you’ll lose money you would have probably clawed back over time.

Industry Super Australia (ISA) Chief Executive Bernie Dean said his organisation’s analysis showed the potential impact on retirement balances if super is accessed early:

• A 20-year-old who accesses the full $20,000 available under the scheme could lose more than $120,000 from their retirement balance.
• A 30-year-old who accesses $20,000 from super now could lose about $100,000 when they hit retirement
• A 40-year-old could lose more than $63,000 from their retirement balance.

If you are facing significant financial hardships due to this crisis, this measure is just one of several ways you can get help. You should explore and weigh all your options carefully before taking up this offer. It would be a wise idea to seek professional advice before making any decision.

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 were a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.

The government has also announced that eligible temporary residents will be able to apply to access up to $10,000 of their super before 1 July 2020. To apply for early release as a temporary resident, you must satisfy one or more of the following requirements:

• You hold a student visa which you have held for 12 months or more and you are unable to meet immediate living expenses.
• You are a temporary skilled work visa holder; your working hours have reduced to zero and you remain engaged with your employer
• You are a temporary resident visa holder (excluding student or skilled worker visas) and you cannot meet immediate living expenses.

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.

Please consider whether you need to seek financial advice before starting your application.

The ATO says that the full application process for superannuation fund members (when the scheme comes into effect on 20 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”

Please note that if you have decided to go ahead with this option, you will be able to apply yourself via myGov and won’t be needing our assistance. However, if you have tried multiple times and couldn’t proceed further, we would be more than happy to assist.

The team at Vivid Partners
info@vividpartners.com.au
08 6270 2876

Please note that the information provided above is general only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information provided above you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Before making any decision, it is important for you to consider these matters and to seek appropriate legal, tax, and other professional advice.