Rules around early access to your superannuation

The economic hardships caused by COVID-19 have forced the Australian Federal Government to relax rules around the early withdrawal of superannuation.

  • Spring 2020

    The economic hardships caused by COVID-19 have forced the Australian Federal Government to relax rules around the early withdrawal of superannuation.

    Information contained in this article is of a general nature only and should not be construed as providing tax, legal, financial or accounting advice on any of the topics discussed. Please consult with your financial and/or tax advisor(s) before making any decisions.

    A piggybank with 'superannuation' written on it in black marker.

    On March 22, as part of its response to COVID-19, the Federal Government announced a scheme which enables people to withdraw up to $20,000 from their super if they are in financial difficulties. 

    People could withdraw $10,000 before July 1 and another $10,000 in the first half of the 2020-21 financial year.

    The Federal Government originally expected 1.5 million people to withdraw $27 billion but it now believes up to 4 million people will take out $42 billion.
    Data released by the Australian Taxation Office in July shows that between April and July 1, the average withdrawal was $8210 with the highest average withdrawals ($9399) being made by those aged in their early 50s.

    So who can make an early withdrawal on their superannuation and how do you go about it?

    Who is eligible?

    Australian and New Zealand citizens and permanent residents may be eligible but, according to the Australian Taxation Office one of the following circumstances must apply:

    • you are unemployed
    • you are eligible to receive one of the following: JobSeeker Payment, Youth Allowance for job seekers (unless you are undertaking full-time study or are a new apprentice), Parenting Payment (which includes the single and partnered payments), Special Benefit, Farm Household Allowance

    OR

    • on or after January 1, 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.

    You do not need to attach evidence to support your application. However, you should keep records and documents to confirm your eligibility as the ATO (Australian Taxation Office) may ask you for evidence to confirm eligibility including payslips; letters, emails or rosters from your employer; bank statements; business cash flow and turnover records.

    Before you apply

    Before you start the application process, you should:

    • Set up your myGov account and link it to the ATO
    • Have your Australian bank account information available. Only Australian bank accounts are accepted
    • Check your super balance or balances.

    Application tips

    If you do decide that accessing your super early is the best option for you, you’ll find details on how to apply and the criteria on the ATO website. To make the application process as smooth as possible, the ATO asks that you check that all your personal details are correct before you submit your application.

    You can only submit one application for COVID-19 early release of super per financial year. If you applied in 2019–20 and you're still eligible, you need to re-apply to access up to a further $10,000 for the 2020-21 financial year.

    An application can't be withdrawn or cancelled once it has been submitted. If you no longer want the release of your super, you will need to contact your super fund.
    If you are concerned that you have applied when you are not eligible and you are unsure how to proceed, you should seek the assistance of a tax professional or the ATO on 13 10 20. 

    Submit an application

    Applications for early release of superannuation are accepted through ATO online services via myGov.

    The application form on myGov will display all your superannuation accounts, as reported to the ATO by your super funds. You can request the release of your super from up to five super accounts. For example, if you want to receive a total of $10,000 you can request $5,000 from one fund and a second $5,000 from another fund. This must be done within one application form.

    If you’re eligible and want to access COVID-19 early release of super in the 2020–21 financial year, you need to submit an application before September 24, 2020. Applications cannot be submitted after midnight (AEST) September 24.

    Once you have applied to the ATO (via myGov), you will receive a letter of determination from the ATO to confirm your eligibility. If your application is approved, you do not need to do anything further; your payment will automatically be made to you.

    Implications of accessing your super early

    Accessing your super early will affect your super balance and may affect your future retirement income. Taking out money early means losing the benefit of compound interest over a lifetime

    Council on the Ageing chief executive Ian Yates said his message to people was simple: "If at all possible, if your savings are in super, keep them in super.”

    Sources:

    Australian Taxation Office www.ato.gov.au

    Council of the Ageing Australia www.cota.org.au

     
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